Social Security Department: Minister’s Report 2015.

Minister's Report 2015

Social Security Department

MINISTER  Susie Pinel

Deputy of St. Clement

ASSISTANT MINISTER Graham Truscott

Deputy of St. Brelade No. 2

CHIEF OFFICER Ian Burns

Presented to the States by the Minister for Social Security.

Contents

Section 1 – Minister's Report ...................................................................................... 4

Minister's Foreword.................................................................................................................................. 4 Social Security – Our Service ..................................................................................................................... 6 Executive summary ................................................................................................................................... 7 Who does Social Security Support? ........................................................................................................ 16 Social Security Overview ......................................................................................................................... 18

Section 2 – Fund Income ........................................................................................... 20

Social Security and Health Insurance Contributions ............................................................................... 20 Long-term care contributions ................................................................................................................. 22 States Grant to the Social Security Fund ................................................................................................ 23 States Grant to the Long-Term Care Fund .............................................................................................. 23 Social Security (Reserve) Fund Investments ........................................................................................... 23 Health Insurance Fund Investments ....................................................................................................... 26

Section 3 – Social Security Fund Benefits (SSF) .......................................................... 28

SSF – Old Age Pensions (OAP) ................................................................................................................. 28 SSF – Survivor's Benefits and Death Grants ............................................................................................ 32 SSF – Short Term Incapacity Allowance (STIA)........................................................................................ 33 SSF – Long-Term Incapacity Allowance (LTIA) and Invalidity Benefit (INV) ............................................ 34 SSF – Maternity and Adoption Benefits .................................................................................................. 36

SSF – Home Carer's Allowance (HCA) ..................................................................................................... 38 SSF – Insolvency Benefit ......................................................................................................................... 38

Section 4 – Health Insurance Fund Benefits (HIF) ....................................................... 39

HIF – Medical Benefits (GP Consultations) ............................................................................................. 39 HIF – Jersey Quality Improvement Framework (JQIF) ............................................................................ 40 HIF – Pathology Laboratory Benefit ........................................................................................................ 40 HIF – Pharmaceutical Benefit.................................................................................................................. 40 HIF – Gluten-free Scheme ....................................................................................................................... 43

Section 5 – Long-Term Care Fund Benefits (LTCF)....................................................... 44 Section 6 – Tax Funded Services and Benefits ............................................................ 46

Tax Funded Services – Back to Work ...................................................................................................... 46 Tax Funded Services – Jersey Employment Trust ................................................................................... 51 Tax Funded Services – Jersey Advisory and Conciliation Service ............................................................ 51 Tax Funded Services – Health and Safety Inspectorate .......................................................................... 52 Tax Funded Benefits – Income Support .................................................................................................. 53 Income Support: Weekly benefit ............................................................................................................ 53 Income Support: Transition (Protected) Payments ................................................................................ 68 Income Support: Special Payments ........................................................................................................ 68 Income Support: Cold Weather Payments ............................................................................................. 69 Income Support: Ministerial Exceptional Payments ............................................................................... 69 Income Support: Child Personal Care Benefit......................................................................................... 69 Tax Funded Benefits – Christmas Bonus ................................................................................................. 70 Tax Funded Benefits – Food Costs Bonus ............................................................................................... 70 Tax Funded Benefits – Cold Weather Bonus .......................................................................................... 70 Tax Funded Benefits – 65+ Health Scheme ............................................................................................ 71 Tax Funded Benefits – 75+ TV Licence Benefit ....................................................................................... 71 Tax Funded Benefits – other benefits ..................................................................................................... 72 Departmental Administration Costs ....................................................................................................... 73

Section 7 – Financial Statements ............................................................................... 74 Appendix: Summary of legislation approved or amended in 2015 ............................ 86

Section 1 – Minister's Report

Minister's Foreword

It gives me great pleasure to present the 2015 annual report of the Social Security Department. Last year was another eventful one for the Department, and I have been most impressed by the enthusiasm with which people from every level of the organisation have pulled together to deliver an ambitious programme to implement change. Together, we have worked to ensure that Social Security continues to provide a full range of benefits and services delivered by high-quality customer facing teams and is playing a leading role in helping Jersey achieve sustainable public finances.

In late 2014, the incoming Council of Ministers was faced with a serious challenge to balance public finances and invest in the key strategic areas of health and education. This required difficult decisions across the board and in September last year the States approved a package of measures to maintain tax funded benefit spend at the 2015 level by the end of the Medium Term Financial Plan in 2019. To achieve this goal very careful consideration was given to identify areas where benefit budgets could be reduced or held steady whilst maintaining a fair and well-targeted support system. I am proud of the way that we have implemented these hard choices and how we have communicated them to the public. Even when they have not been popular, we have been clear with our plans, and have aimed to make sure that the people of Jersey understand why changes are needed and how they will be affected.

In 2015 we continued to make significant progress in addressing the Island's historically high levels of unemployment. In this area I am fortunate to have the support of Deputy Graham Truscott as Assistant Minister, to whom I have delegated responsibility for our Back to Work programme. As a local businessman he understands that unemployment can only be tackled by working closely with the industries that make Jersey what it is. We benefit from having a unique economy, with unique opportunities, and our success in matching the needs of businesses against the target of reducing unemployment is built on distinct Jersey solutions.

Each year there are typically around 4,500 - 5,000 individuals who are, at some point, registered with the department to find work. Throughout the year, we helped unemployed people into a total of 1,910 jobs. Overall, the number of jobseekers fell steadily from a high of 1,620 down to 1,390 by the end of the year. At the same time, we extended the help we give to people who have been out of work due to long-term illnesses, and the support we give to parents who are re-entering the workplace. This will help them move towards financial independence. We reduced the number of jobseekers aged 16-24 from 350 to 150. This represented a real success for targeted Back to Work initiatives for this group, who may need extra support at the start of their working lives. We repeated successful events such as JobsFest, and developed new initiatives to prepare local unemployed people for the specific needs of our employers.

We also continued to respond to one of Jersey's biggest long-term challenges: the ageing profile of our population. As people live longer, they require different kinds of services and benefits from government. We have built on the successful launch of the Long-Term Care benefit in mid-2014 to move towards a steady "business as usual" in 2015. The new scheme provides assistance to islanders who need help with the costs of long-term care, either in a registered care home or in their own homes.

Social Security – Our Service

Our overarching aims are to help people achieve and maintain financial independence and to provide benefits to those islanders who are unable to support themselves. Our purpose is to offer:

Support, Opportunity and Service by

Supporting people to achieve and maintain an acceptable standard of living,

Helping employers and employees to work well together for their mutual benefit and the economy of the Island,

Planning for an ageing population, and

Delivering benefits and high quality services.

We are responsible for:-

• A compulsory, contributory Social Security Insurance Scheme that receives contributions from employers, employees and general tax revenues. This scheme is most closely associated with the payment of pensions, but it also provides contributors with benefits throughout life by offering support from Maternity Allowances through to Death Grants.
• A compulsory, contributory Health Insurance Scheme that receives contributions from employers and employees. This scheme subsidises GP consultation fees and pays for prescriptions issued by GPs and dentists.
• A compulsory, contributory Long-Term Care scheme that receives contributions from individuals and general tax revenues. The scheme provides a range of benefits for adults with long-term care needs.
• Non-contributory means-tested benefits including Income Support. These are funded from general tax revenues and provide targeted support for lower income households. In addition the tax funded Christmas Bonus is paid to local pensioners and certain other benefit claimants.1
• Back to Work services which help people into work and support adults with barriers to employment to obtain and maintain paid work. The Department funds the Jersey Employment Trust (JET) to provide specialist employment advice, training and support for those with a disability or long term health condition.
• Employment legislation, which sets out minimum standards for good employment relations and protection in the workplace. The Department funds the Jersey Advisory and Conciliation Service (JACS) to provide advice, training and conciliation.
• Health and Safety legislation providing a legal framework which sets out the duties of employers and employees to observe health, safety and welfare at work, as well as the Health and Safety Inspectorate which provides proactive advice to employers and undertakes investigations when things go wrong.
• Discrimination legislation that creates protected characteristics' ensuring that people are not treated unfairly due to their race, sex, sexual orientation, gender reassignment or pregnancy/maternity. We plan to extend the law to cover age and disability discrimination in the coming years.
• The maintenance of the Names and Addresses Register and the registration of individuals and businesses under the Control of Housing and Work Law.

1 The previous form of the Christmas Bonus was paid for the last time in 2015. Proposals for a targeted Christmas Bonus will be brought forward in 2016.

Executive summary  

Benefits Administered by the Department  2015 spend  Supporting

£ million

Old Age Pensions  166.7   30,122 pensioners

Medical Benefits and Jersey Quality Improvement  9.8   355,497 GP consultations Framework (GP services)

Other Benefits (Less than £250,000)  0.3  

Table 1:        

Improving Services

offer sound value for money. We are especially proud to report that 2015 was the third year in a row that a member of staff from Social Security won the public sector category in the Island-wide customer service award.

In real terms, improving our customer service means reduced waiting times and repeat visits, reducing backlogs and processing times, and the continual improvement of our written communications. It means engagement with the eGov programme so that we can provide more options to let the public do business with us in the most convenient ways. We spent 2015 doing groundwork for our expansion of online services, as well as preparing to shift many services to our front office so that our customers can accomplish what they need without repeat visits to our building. We introduced a "welcome host" role in October 2015 to meet and greet customers and request customer feedback. This personal touch is appreciated by the public, but it also delivers a real benefit by improving the efficiency of our services and reducing the time people spend in queues. More efficient service saves us money and resources, which we can direct into improving other areas of our business.

Many of our improvements have been delivered as a result of our engagement with the States-wide Lean initiative. The Lean methodology is designed to reduce waste and increase value across organisations, by empowering all staff to explore more efficient ways to do their jobs without decreasing the level of service we offer to the customer. In 2015 the Department strengthened its commitment to Lean and incorporated our most experienced Lean practitioners into the Business Enablement Team. During the year we looked at the Control of Housing and Work legislation and investigated how the process for getting a registration card could be improved as well as reducing the turnaround time for getting a business license or staffing permission. We also completed successful projects to improve the letters we send out for missing contributions, and to remove the need for some self-employed customers to supply a copy of their tax return to us.

As one of the busiest areas of our Department, 2015 saw a specific focus on improvements made within the Income Support team. The team members themselves were involved in planning, communicating and delivering key activities during the year, including our MTFP changes and improved communications around the annual benefits uprate. They saved money by negotiating new contracts for some of the items that we help low-income households purchase. The team also kicked off a lean project to change the way that people on Income Support can report getting a new job. This delivered real benefits by reducing overpayments of benefit and cutting down on the paperwork needed when people on benefit move into new employment.

Joined up government

The Social Security Department is playing a lead role in the States-wide "Tell Us Once" initiative, which reduces the need for people to tell multiple States departments about changes. For example now, when a child is born or someone arrives or leaves the Island they only need to tell us once, and businesses have a single point of contact when they set up or have ceased trading.

We began a project with the Education Department that laid the foundations for the creation of Jersey Premium, a targeted investment to increase educational attainment for children in low-income families.

We also incorporated the Affordable Housing Gateway with our operational teams and this has enabled us to streamline the application process for customers and improve the working relationship with providers of social housing. Together we share a large proportion of our customers, and our staff used this opportunity to improve our outreach to people who might not realise they qualify for some of our benefits.

2015 was the first full year that the Population Office operated as part of the Social Security department. Their aim is to enhance the overall effectiveness, efficiency and equity of migration controls in Jersey by regulating who is entitled to live and work in Jersey. This includes dealing with residential qualifications and registration cards, and processing applications for business licenses relating to the employment of migrant workers.

Managing Public Finances

Phased changes to Income Support, including removal of single

parent component, introduction of percentage pension disregard  0.8  1.7  2.8  3.2 and net improvements in incentives

Table 2:        

Combatting fraudulent activity

The Social Security Department considers and treats fraudulent benefit claims very seriously. Cases of serious fraud are pursued through the court system, and lead to significant punishments including custodial sentences. In the majority of cases the amounts of benefit overpayment are smaller and less likely to justify the cost of a criminal prosecution. This is reflected in the ratio of claims investigated to claims prosecuted.

However, it should be noted that many cases that are investigated do identify other situations where benefit has been overpaid. Where this is found to be the case repayment is enforced through ongoing benefit entitlement or through a managed instalment plan.

Taken together, the Department is confident that robust investigation powers, sophisticated fraud monitoring and headline prosecutions keep benefit fraud in Jersey to a low level compared to other jurisdictions.

All intelligence relating to potential benefit is evaluated based upon the quality of the information provided, the likely risk of the fraud occurring, and the value of any potential overpayment. The National Intelligence Model (NIM) was introduced within the Social Security Fraud Team in Jersey in 2013; this is a model successfully used by UK enforcement officers for grading intelligence, decision making and assessing risk.

After evaluation, the cases are prioritised and then investigated accordingly. Often, leads are identified as genuine mistakes from claimants rather than fraud and these can be quickly rectified and repayment arranged.

In 2015:

• 729 cases were reported and 537 investigated
• 7 Prosecutions were made, with a total value of £75,287.30

Getting People Back to Work

2015 was the final year of the States' previous (2012) Strategic Plan, which identified getting people into work as the government's greatest priority. In this final year, we built on the successful programmes developed by Back to Work and the number of people registered as actively seeking work (ASW) fell to 1,390 by the end of December 2015 – from a high of 1,620 in February. All in all a total of 4,590 individuals were registered with the Department at some point in 2015 and 1,910 paid job opportunities were filled by jobseekers.

The headline ASW figure doesn't provide the full picture, as during 2015 we successfully expanded our services to provide assistance to groups of people who hadn't previously received targeted help from Back to Work.

In particular, the improving economic climate and the success of the Back to Work initiatives over the last three years provided the Department with the opportunity to enhance the support available to parents under the Income Support scheme and to coordinate the rules for these parents more closely with current nursery provision available through the Education Department. From September 2015, we now expect parents to engage with the Back to Work process at the point at which their child becomes eligible for support provided via the Nursery Education Fund. Up to that point, many parents hadn't previously engaged with our employment services until the child's fifth birthday. This change saw the registration in September 2015 of almost 100 parents of children starting primary school and 140 parents whose youngest child (aged 3+) was starting nursery. Bringing these parents together at the start of the school year means that we have been able to provide tailored courses, address the concerns and issues that are common to many parents and offer focussed support to enable them to move into part time employment.

From February 2015 we also extended the scope of Back to Work to provide support to Income Support claimants who have an ongoing low-level illness or disability. Over 90 people were added to the ASW register and were

Supporting workers

contracted to work. This is a major increase in the protection of employees on zero-hour contracts and links with the new protection against sex discrimination and family friendly rights.

Following a period of public consultation, statutory procedures for the Employment and Discrimination Tribunal were introduced in April 2015 to ensure that complaints to the Tribunal are managed effectively and efficiently. The Minister is also responsible for setting the minimum wage based upon the recommendation of the independent Employment Forum. The Minister increased the minimum wage and trainee rates by 2.8% in April 2015.

The Minister directed the Forum to consult on two additional Employment Law issues during 2015 and the Minister accepted both of the Forum's recommendations in December 2015:-

1. Remove the two-thirds rule from the Employment Law so that employees working under fixed-term contracts of 26 weeks or less qualify for protection against unfair dismissal after 52 weeks' service. This change removes unnecessary complexity from the Employment Law – which for some employers could remove a barrier to the creation of new jobs under appropriate contracts – and brings parity in the unfair dismissal rights of employees working under different types of employment contracts.
2. The Employment and Discrimination Tribunal has been given the power to award financial compensation to employees where their employer does not comply with 3 fundamental employment protections: written terms of employment, pay slips and rest days. These are very straightforward to provide, and it is hoped that the additional protection will encourage employers to meet these basic entitlements.

Supporting workers during short and long-term illnesses is an essential function of the Social Security system. Just under 25,500 claims for Short Term Incapacity Allowance (often called "sickness benefit") were made during 2015. 50% of these claims lasted less than 8 days but 9% lasted more than 45 days. Since 2012, the total number of days paid and the average length of claim has been decreasing annually.

The Health and Safety Inspectorate carries out a wide range of actions aimed at ensuring that people at work and others who could be affected by working activities are not exposed to risks to their health or safety. Throughout 2015 the Inspectorate continued to develop and focus on the most effective ways to maintain and improve workplace health and safety performance with the limited resources available. Significant progress was made in respect of a number of legislative changes to ensure the regulatory framework remains effective and fit for local workplaces. This included a draft set of new Regulations for the construction industry being lodged with the States Greffe for debate by the States Assembly in early 2016.

In 2015, 748 work-related accidents and incidents were reported through claims made for Social Security benefit, an increase of 70 compared to 2014. Whilst the number of work-related accidents remained relatively stable compared to 2014, the number of work-related illnesses increased by approximately 21%. The number of working days lost totalled 26,128, representing an increase of 6,709 days over the 2014 figures. Unsurprisingly the amount paid out in Short Term Incapacity Allowance for these claims also increased significantly (by approximately 38%) to £736,250. The increase in the number of working days lost is considered to be due to the increased numbers of work-related ill health, and stress-related illnesses in particular, which typically result in longer absences than work-related accidents.

During the year, the Inspectorate carried out 70 investigations into serious accidents and incidents, 241 proactive inspections of high risk workplaces and followed up on 119 thorough examination reports of defective equipment. During 2015, 28 legal enforcement notices were served by Inspectors, 17 immediate Prohibition Notices and 11 Improvement Notices.

The Health and Safety Inspectorate publishes a separate annual report which gives more detail on specific activities.

Adjusting to an ageing population  

http://www.gov.je/Government/Pages/StatesReports.aspx?ReportID=968

Planning for the future

The net asset value of all four ring-fenced funds at the end of 2015 was just over £1.46 billion, split between the Social Security Fund – £89 million, the Social Security (Reserve) Fund – £1, 288 million, the Health Insurance Fund – £76 million and the Long-Term Care Fund – £11 million. This build-up of reserves is a sensible approach to the provision of future pensions and benefits, particularly when considering the demographic changes that are on course to affect all economies in the developed world. Simply put, people are drawing pensions for longer as lifespans increase, whilst birth rates remain static, reducing the ratio of workers to pensioners and therefore adding to the pressure on the pension fund. Jersey is in a robust position that few other jurisdictions can match, but nevertheless it is inevitable that these trends must be factored into our long-term planning.

A high level summary of the 2015 results for the four funds is shown in Table 3 below:

Social Security  Social Security  Health  Long-term Care Fund  (Reserve) Fund  Insurance Fund  Fund

£ million  £ million  £ million  £ million

Income  235.4  35.2  32.6  36.4 Expenditure  217.5  -  38.6  37.1

Table 3: Fund results for 2015.

Who does Social Security Support?

Babies  Children  Working Age

Income Support Child Component  Income Support Child Component  Income Support is an income related supports low income families with the  supports low income families with the  benefit that provides support for those living costs of their children  living costs of their children  looking for work and those in work

towards the cost of living.

Income Support Childcare  Income Support Childcare

Component supports working parents  Component supports working parents  Insolvency Benefit provides financial

with childcare costs of 0 to 11 year  with childcare costs of 0 to 11 year  assistance to employees whose employers olds  olds  become insolvent

Maternity and Adoption Grants  Dental Fitness Scheme helps toward  Back to Work teams provide support, provide a lump sum to help with the  the cost of dental treatment for 11-21  coaching and training to help unemployed general costs of having a baby  year olds  people back into work

Maternity Allowance is a weekly  Child Personal Care Benefit supports  Health and Safety Inspectorate ensures payment to help mothers while they  parents of children who meet the  employers provide safe working

take time off work to have their baby  requirements for the highest levels of  environments

impairment award

Home Responsibility Protection  Jersey Advisory and Conciliation Service Credits protect pension records for  Student Credits protect pension  provides advice to employers and

people who stay at home to care for a  records while students are in full time  employees

child  education

Short-Term Incapacity Allowance is a Medical and Pharmaceutical Benefits  Medical and Pharmaceutical Benefits  daily benefit which provides income when subsidise the cost of visiting a GP and  subsidise the cost of visiting a GP and  a worker is unable to work due to sickness any medicines prescribed  any medicines prescribed

Survivor's Benefits support a spouse or civil partner if their partner dies

Key:

Tax funded Benefit/Service  Medical and Pharmaceutical Benefits

Long Term Care Benefit  subsidise the cost of visiting a GP and any Contributory Benefit/Credit  medicines prescribed

Health Insurance Benefits

Illness and Disability  Pensioners

Income Support Medical Components provide  Income Support supports lower income additional assistance to lower-income  pensioner households

households that include someone who has a

Food Costs* and Cold Weather Bonuses long term medical condition

provide help with the cost of food items and Housing Adaption Grants help with the cost of  heating the home for pensioners who don't adaptations to the home of those with  pay tax

permanent disabilities

Christmas Bonus* is a one off payment to all Jersey Employment Trust and Back to Work  pensioners resident in Jersey

help people with disabilities prepare for, find

TV Licence Benefit pays for the TV licence for and maintain employment

over 75's who don't pay tax

Long Term Care helps fund the care fees for

65+ Health Scheme subsidises dental, optical people with care needs

and chiropody costs for pensioners who Long-Term Incapacity Allowance and  don't pay tax

Invalidity Benefit support those with a long

Long Term Care helps fund the care fees for term illness or disability; either physical or

people with care needs

mental, both in work and those unable to work

Old Age Pension helps to cover basic needs Home Carer's Allowance supports carers who

in old age and is based on contributions paid give up work to look after someone with high

throughout the working life

personal care needs

Death Grants help with funeral expenses Medical and Pharmaceutical Benefits

subsidise the cost of visiting a GP and any  Medical and Pharmaceutical Benefits medicines prescribed  subsidise the cost of visiting a GP and any

medicines prescribed

Gluten-Free Vouchers help individuals who

need a gluten-free diet

*These benefits are also available to some working age families

Social Security Overview

The body of this report describes the activities of the Social Security Department:

Collection of contributions from individuals/employers.

Administration of funds.

Provision of benefits and services.

It is divided into six sections:

1. Fund Income Sources, which details the income sources to the four funds administered by the Department.
2. Social Security Fund, which details the benefits administered under the Social Security Law.
3. Health Insurance Fund, which details the benefits administered under the Health Insurance Law.
4. Long-Term Care Fund, which details the benefits administered under the Long-Term Care Law.
5. Tax Funded Services/Benefits, which details the services provided and benefits administered through tax funded money, including Income Support and the Back to Work programme.
6. Financial Statements, for the four funds administered by the Department as well as tax funded revenue.

The figure opposite shows the Social Security revenue sources and demonstrates the financial flow through the funds into the benefits and services. For simplicity it does not show all the financial information, such as investment income, depreciation or administration. These figures are located within the Financial Statements section of the report.

Figure 1:  

Section 2 – Fund Income

The Funds administered by the Social Security Department have three sources of income.

1. Contributions collected from individuals and employers
2. Grants from the States
3. Investment income

Social Security and Health Insurance Contributions

Contributions from working age adults are due on earnings up to pre-defined earnings ceilings;

• A contribution rate of 12.5% is payable on all earnings up to the Standard Earnings Limit (SEL) of £48,240 per year.

For Class 1 contributors (employed) the 12.5% liability is split between the employer (6.5%) and the employee (6.0%). Class 2 contributors (self-employed and others not in paid employment) are liable to pay the full 12.5%.

• Since January 2012 a contribution rate of 2% is payable on earnings between the SEL and the Upper Earning Limit (UEL) of £159,624 per year.

Employers and Class 2 individuals are liable to pay the 2% contribution.

In some situations employees are not required to pay their 6% liability, for example people who are in receipt of an Old Age Pension, people receiving Survivor's Allowance (in the first year of bereavement) and some women married before April 2001.

Income Received from Contributors

Table 4 provides an overview of the contributions received and the number of contributors:

2011  2012  2013  2014  2015 Class 1 contributions paid by employees below SEL (£000)  77,370  78,841  78,105  80,286  85,782 Class 1 contributions paid by employers below SEL (£000)  83,817  85,412  84,614  86,977  92,931 Total of Class 1 contributions below SEL (£000)  161,187  164,253  162,719  167,263  178,713 Total of Class 1 contributions above SEL (£000)  -  5,121  5,163  5,323  5,462 Total of Class 2 contributions below SEL (£000)  16,169  15,544  14,971  17,007  14,987 Total of Class 2 contributions above SEL (£000)  -  1,974  2,136  2,159  1,627 Total Value of contributions (£000)  177,356  186,893  184,988  191,752  200,789 Average No of Class 1 contributors during year  48,359  47,620  47,091  47,614  48,666 Average No of Class 2 contributors during year  3,877  3,783  3,751  3,783  3,860 Average Total No of contributors during year  52,236  51,403  50,842  51,397  52,526 Average Class 1 contribution per annum (£)  3,333  3,557  3,565  3,625  3,784 Average Class 2 contribution per annum (£)  4,170  4,631  4,561  5,066  4,304 Average Total contributions per annum (£)  3,395  3,636  3,638  3,731  3,823

Table 4: Contributions and contributors, 2011 to 2015.5

5 Income from Contributions is recognised in the period in which the earnings they relate to were earned, and as a result an estimate of the contributions due relating to last quarter of the year that had not been received at the year end must be made. In previous periods this estimate has been overstated, meaning that there has been an over-recognition of contributions income. This has been corrected in these accounts, and previous periods restated. As a result contributions income for 2014 has increased by £2.1 million compared to figures previously reported.

Up 5%  Down 1%  Up 4%  Up 5%  

Figure 2:  

Level of Contributions

Figure 3:  

Number of Contributors

Contributions are recorded monthly and the number of Class 1 contributors shows a variation in line with the seasonal activities within the Jersey economy, with 6.1% more Class 1 contributors in July than February. Across the year there was a monthly average of 48,666, an increase of 1,052 Class 1 contributors (2.2%) from 2014, with the increase being driven by the second half of 2015.

There had been a steady decline in the number of Class 2 contributors over recent years with a slight increase in 2014. This upward trend continued into 2015 saw a small increase from an average of 3,783 in 2014 to 3,860 Class 2 contributors in 2015.

Allocation of Contribution Income

Class 1 and Class 2 contributions are allocated to the Health Insurance Fund and the Social Security Fund according to fixed percentages.

Employer  Employer  Employee

Class 2  Class 2 Fund  Class 1  Class 1  Class 1

(below SEL)  (above SEL) (below SEL)  (above SEL)  (below SEL)

Social Security Fund  5.3%  2.0%  5.2%  10.5%  2.0% Total  6.5%  2.0%  6.0%  12.5%  2.0%

Table 5: Percentage allocation of Class 1 and 2 contributions to the Health Insurance Fund and Social Security Fund.

Contribution Credits

In some circumstances contribution credits are available to protect people's contribution record and their entitlement to certain Social Security benefits. As well as protecting records during periods in which a contributory benefit is being claimed, credits are also available to:

• People caring for a child at home (1,289 people as at 31 December 2015).
• People over 18 in full-time education (664 people as at 31 December 2015).
• People who have been made compulsorily redundant (17 people as at 31 December 2015).

The most common source of contribution credits is for those caring for a child at home. This is known as Home Responsibility Protection (HRP) and is available for an adult who is not working in order to look after a child under five years old, with a maximum of 10 years of credits available for any one person.

Long-term care contributions

In 2015, the maximum long-term care contribution rate was 0.5%. The amount of contribution is based on an individual's total income taking into account their tax allowances and reliefs and is only chargeable up to the upper earnings limit (UEL). Following the introduction of the long-term care charge on 1 January 2015, £8.4m of income was raised through long-term care contributions. In 2016, the maximum long-term care contribution rate increased to 1%.

States Grant to the Social Security Fund

Table 6:  

States Grant to the Long-Term Care Fund

Social Security (Reserve) Fund Investments

The investment strategy of the Social Security (Reserve) Fund is developed by the Minister for Treasury and Resources and written in consultation with the Minister of Social Security. The Fund is managed by the Treasury and Resources Department in line with this strategy. One of the main aims for the fund is long-term growth. It is expected that there will be no requirement to draw on the assets of the fund in the near future and that during this period there will continue to be net cash inflows to the fund.

To meet its aims the Social Security (Reserve) Fund seeks to earn long-term capital returns by allocating a higher proportion of its assets to a well-diversified mix of equities. The published investment strategy of the Social Security (Reserve) Fund is to invest 80% of its portfolio in equity, 10% in bonds and the remaining 10% in alternative asset classes. The proportion of holdings in each asset class may vary within strategic ranges as prices move on a daily basis. As at the year end all holdings were within the fund's strategic range.

Method of Investment

The investment strategy may be pursued through direct investment or investment through the States of Jersey Common Investment Fund (CIF).

As at the year end, the value of the Social Security (Reserve) Fund's investment holdings was £1,288.4m. At the beginning of the year, the Social Security (Reserve) Fund held a range of investments both within the CIF and outside. The assets outside the CIF were held with Legal and General and were invested in a range of passive vehicles; during the year these assets were transferred into the CIF. The year-end holding in the CIF are illustrated in Figure 4.

The CIF is an administrative arrangement that allows States funds to pool investments to benefit from greater investment opportunities and economies of scale. Further information is published in the States of Jersey Financial Report and Accounts. The full accounts can be found on the States of Jersey website:

(http://www.gov.je/Government/Pages/StatesReports.aspx?ReportID=2108)

The CIF is arranged into various pools', each pool representing an asset class and managed by an independent investment manager. A Fund such as the Social Security (Reserve) Fund is able to invest in individual pools in line with its investment strategy.

Investment Asset Split within the Social Security (Reserve) Fund

Figure 4 illustrates the split of core assets held by the Social Security (Reserve) Fund as at 31 December 2015. The equity holdings of the fund are split between those managed on an active and passive basis. Active managers attempt to outperform the market with various investing strategies and through buying/selling decisions while passive managers seek to replicate an index performance.

The Social Security Reserve Fund invested in the CIF from 1 October 2010. By 31 December 2015 holdings in the CIF accounted for 100% of the fund's total value.

Figure 4:    

2015 Performance

seeking class. The pool however is expected to provide a more consistent, lower volatility return combined with greater downside protection relative to the equity classes.

The income generated by the Fund was significantly lower than in 2014, variation in the Funds level of earnings is expected as the return seeking assets, whilst generating higher returns, are also subject to greater short term volatility. Due to short term volatility, the returns of the Fund are best reviewed over a long term investment horizon. Investment returns from the CIF investments of the Fund equated to an annualised yield of 11.8%, measured over three years. Over that period performance of the Fund is in excess of the Funds benchmark and the expected long term return assumed by the Funds actuarial valuation.

Health Insurance Fund Investments

The Health Insurance Fund was established under the Health Insurance (Jersey) Law 1967. The fund receives allocations from Social Security contributions to pay claims for Medical Benefit (GP subsidy) and Pharmaceutical Benefit as defined in the above law.

In order to best meet the fund's aims it follows a balanced investment strategy seeking to provide both capital growth and income generation but maintaining an appropriate degree of security over the fund's capital value. The strategic aim of the fund is to invest 40% of its portfolio value in equities, 45% in bonds and 15% in cash and cash equivalents. The equity portion of the portfolio is considered to be a return seeking asset class. Those assets are mostly actively managed and held to generate long-term returns. The bonds/cash portion of the portfolio is held to provide a degree of capital preservation and income generation and is also actively managed. The proportion of holdings in each asset class may vary within strategic ranges as prices move on a daily basis. As at the year end all holdings were within the fund's strategic range.

Method of Investment

Although the Health Insurance Fund may pursue its investment strategy via direct investment or investment through the States of Jersey CIF, since mid-2010 its whole investment portfolio has been invested through the CIF.

As at the year end, the value of the Health Insurance Fund holdings within the CIF was £73.7m, following drawings of £6m made during the year. The breakdown of investments is illustrated in the chart in the following section.

Investment Asset Split in the Health Insurance Fund

Figure 5 illustrates the split of core assets held by the Health Insurance Fund as at 31 December 2015.

Figure 5:  

2015 Performance

Section 3 – Social Security Fund Benefits (SSF)

The Social Security Fund pays for benefits to contributors who have made the required contributions and satisfy other specific conditions. Benefits mainly support claimants at times when they are less likely to be able to support themselves through employment, including maternity, sickness and old age. The amounts paid across the full range of benefits available through the Social Security Fund in 2015 are as follows:

2014  2015 Social Security Fund Benefit

£000  £000

Old Age Pensions  160,464  166,746 Short term incapacity allowance  12,413  12,315 Long-term incapacity allowance  14,858  15,515 Invalidity benefit  8,087  7,289 Survivor's Benefits  4,592  4,550 Maternity Benefits  2,587  2,958 Home Carer's Allowance  1,938  1,872 Insolvency Benefit  59  (26) Death grant  460  521 Total benefit expenditure  205,457  211,741

Table 7: Social Security Fund benefit expenditure 2014 and 2015.

SSF – Old Age Pensions (OAP)

Old age pensions can be claimed by anyone over pension age who has worked in Jersey and has paid Social Security contributions for at least 4½ years.6 Pensions can be claimed by anyone who meets the contribution criteria, including people who have since left Jersey.

The value of the pension depends on the number of years of contributions with the maximum, full rate of pension being paid to those with a contribution record of 45 years or more.

Historically the old age pension was increased once a year in line with the growth in average earnings. In the past earnings have increased at a greater rate than inflation and thus the value of the old age pension grew in real terms. More recently however, and on a number of occasions, inflation has exceeded the increase in earnings and thereby the value of pensions has decreased in real terms. In 2013 a new uprating method was introduced to safeguard the value of the pension. This new methodology increases the state old age pension with reference to both inflation, measured through the Retail Price s Index for Pensioners, and average earnings, measured by the Index of Average Earnings. The new method of uprating pensions ensures that pensions increase at least in line with inflation; at the same time, in the longer term increases will track the growth of average earnings.

In October 2015 the annual uprate was applied using the new methodology, with the standard rate of pension increasing by 1.3% from £197.40 to £199.99 per week. For couples married before April 2001 a married pension is available based on the contribution record of the husband and the full pension is paid at 166% of the single rate (£332.01 for 100% pension).

6 A pro-rata pension is also payable where there is an aggregate of 4½ years in the case of nationals of countries with whom Jersey has a reciprocal agreement. http://www.gov.je

Weekly full (100%) Old Age  

£184.45  £187.25  £193.48  £197.40  £199.99  Pension rate at year end £  

Table 8:    

Up 2%

Up 2%

Up 3%

Up 3%

Figure 6:      

Demographics of Old Age Pensioners

Figure 7:        

Old Age Pension Payments

Figure 8:        

85% of Jersey residents receive a pension of over 50% of the full pension compared to only 16% of non-Jersey residents.

Figure 9:          

Jersey  136,124  82%  17,895  59%  

Table 9:    

SSF – Survivor's Benefits and Death Grants

Survivor's Allowance  71  153.60

Table 10:  

Figure 10:      Figure 12:  

Figure 11:  

Total Value of Death Grants

472  482  483  460  521 £000

Table 11:      

SSF – Short Term Incapacity Allowance (STIA)  

Cost of STIA Claims £000  12,692  13,650  12,938  12,413  12,315

T

Figure 13:          

Infections  27%  6,888  53,057  7.7

Table 13:  

SSF – Long-Term Incapacity Allowance (LTIA) and Invalidity Benefit (INV)

8 The extent of incapacity is assessed by reference to the loss of faculty arising from a disease or injury.

Figure 14:  

Depression  621  17%  36%

Table 14:  

Figure 15:      

SSF – Maternity and Adoption Benefits

Figure 16:  

Figure 17:            

No. of Maternity Allowance claims starting in the year  944  982  894  834  876

No of Births Recorded  1,102  1,123  1,017  985  997

Table 15:    

SSF – Home Carer's Allowance (HCA)

At the beginning of 2013, the Home Carer's Allowance replaced the Invalid Care Allowance tax funded benefit. The new benefit is similar to the old Invalid Care Allowance, and is in place to help people who give up employment to take on a caring commitment for a person who needs a high level of personal care.

To qualify for Home Carer's Allowance claimants should be of working age, spend at least 35 hours each week caring and have earnings of no more than £146.77 per week. These requirements were also in place for the old benefit.

In the past people with an annual household income of £62,382 (2012 cap) or over could not claim Invalid Care Allowance. Now the household income cap has been removed. There is, however, a requirement for the carer to have a Social Security contribution record. The new benefit also requires that the "cared for" person has lived in Jersey for at least one year.

In 2015 there were 179 claimants, of which the majority were female, at a total cost of just under £1.9 million.

Gender  Claimants  Average age Female  140  51

Table 16: Number of Home Carer's Allowance claimants as at 31/12/2015 by gender and average age.

SSF – Insolvency Benefit

Insolvency Benefit was introduced on 1 December 2012 and provides financial assistance to employees who are made redundant due to the insolvency of their employer. This benefit replaced the temporary, tax funded, insolvency scheme originally introduced in 2009. The amount of benefit is calculated based on amounts owed to employees by the former employer in respect of the following four components:

1. Unpaid wages relating to the 12 months prior to employment ending.
2. Holiday pay relating to the 12 months prior to employment ending.
3. Statutory redundancy pay (one week's capped pay for each year of service, subject to a minimum of two years' service).
4. Pay in lieu of notice on termination of employment (up to 12 weeks' pay).

The maximum amount of Insolvency Benefit is capped at £10,000 and the Social Security Fund will meet the person's liability for Social Security contributions and income tax (ITIS) on those sums.

During 2015, there were 4 new claims from the former employees of 2 insolvent employers which resulted in payments of £16,000. The total expenditure shows a negative figure of -£26,000 as a result of carry-over from claims in 2014. This is a further reduction on the cost in 2014.

Section 4 – Health Insurance Fund Benefits (HIF)

Medical Benefit – GP consultations  7,108  7,298

Medical Benefit – pathology benefit  893  924

Gluten-free Vouchers  279  329

Table 17:        

HIF – Medical Benefits (GP Consultations)

No of GP consultations  363,089  363,601  351,099  349,102  355,497

Table 18:  

HIF – Jersey Quality Improvement Framework (JQIF)

The Jersey Quality Improvement Framework (JQIF) was introduced in 2015 as an additional income stream for GP practices based on a standard contract aimed at encouraging high quality outcomes for patients. All GP surgeries participated and in 2015, the contract contained 34 clinical and organisational measures describing the standards and activities which GP surgeries should achieve. These included, for example, the creation of a register of patients with diabetes and measures regarding specific interventions for this condition. Payments were made to GP practices according to their level of activity against each measure totalling £1.6 million.

HIF – Pathology Laboratory Benefit

In January 2010 the Health and Social Services Department introduced a charge for analysing blood samples provided by GPs. A new benefit was set up within the Social Security Department, funded through the Health Insurance Fund, to ensure that this cost was not passed on to the patient. The benefit covers blood samples taken for haematology testing and for clinical chemistry testing and was introduced at a standard rate of £10 before being increased to £10.35 in June 2012, and has remained at that rate since.

2011  2012  2013  2014  2015 No. of Pathology Laboratory benefit

claims paid during year  80,075  84,562  88,763  86,250  89,308 Cosclaimt osf p Paiatdh doulogyring y Labearora £000tory9 benefit  801  860  919  893  924

Value of Pathology Laboratory benefit on  10.00  10.35  10.35  10.35  10.35 31 December £

Table 19: Number and cost of Pathology Laboratory benefit claims, 2011 to 2015.

HIF – Pharmaceutical Benefit

Pharmaceutical benefit covers the full cost of prescription drugs prescribed by GPs and includes a dispensing fee paid to community pharmacists, in respect of each item dispensed. The Minister for Social Security is responsible for maintaining the list of drugs that are available on prescription from GPs.

2011  2012  2013  2014  2015 Total No. of items prescribed  1,707,644  1,784,798  1,846,713  1,871,770  1,936,690

during year

Average cost of a prescribed item

6.82  6.58  6.44  6.65  6.96

£

Table 20: Costs of Pharmaceutical Benefit, 2011 to 2015.

9 Pathology Laboratory benefit costs have been restated for years prior to 2015.

Up 3%

Up 1%

Up 3%

Up 5%

Figure 18:        

Types of Drugs Prescribed  

Figure 19:    

Drugs to treat high blood pressure and heart failure (ACE inhibitors)  151,862  +1%

Figure 20:  

HIF – Gluten-free Scheme

Number of gluten-free

claimants  311  373  423  481  572

Av£ erage cost per claimant  596  595  607  579  575

Table 22:    

Figure 21:        

Section 5 – Long-Term Care Fund Benefits (LTCF)

A new long-term care fund was set up at the end of 2013. This ring-fenced fund is designed to collect long-term care contributions from tax payers and makes benefit payments to adults who have long-term care needs.

Initial funding was provided by the States to allow benefits to be paid from 1 July 2014 whilst collection of long- term care contributions started at the beginning of 2015. The long-term care scheme continues to be funded by an annual States grant and collection of contributions, which in 2015 were set at 0.5% of taxable income up to the Upper Earnings Limit. 2015 was the first complete year in which scheme was running. In total, £36m was paid out in long-term care benefit in 2015, which pro rata was an increase on the £16.9m paid out for the 6 months that the scheme was active in 2014.

Long-term care benefit

One of the key features of the LTC scheme is to protect households from the uncertainty associated with the risk of incurring catastrophic care costs. To this end, the long-term care benefit (a universal non-means-tested benefit) is payable once care costs reach a certain level – regardless of a household's income and assets.

LTC benefit helps all households with their care costs once they have reached the standard care costs cap (£52,120 in 2015). The benefit is paid at 4 levels, depending on the type and level of care needed. The weekly rates from 1st July 2014 were set at:

Level of  Weekly cost for standard standard care  care in a care home

1  £353.15

2  £539.07

Table 23: Long-term care standard care costs.

A single rate of £601.86 per week applies to a care package provided in a group home setting. The long-term-care benefit is also available to people receiving care in their own home. In this case, the benefit rate reflects the actual cost of care up to the standard care cost in a care home.

The universal LTC benefit does not cover the living costs of being in a care home. Support for care costs up to the standard care costs cap of £52,120 and living costs in a care home are provided through two other aspects of the long-term care scheme – long-term care support and long-term care property loans.

Long-term care support

Long-term care support (means-tested financial support) is available to households to help meet care costs and living costs in a care home, depending on the income and assets of the household.

LTC support is available to households whose income is not enough to meet these costs and whose total assets are below £419,000. LTC support helps towards standard care fees and towards the costs of living in a care home (£312.76 for board and lodging plus £34.09 personal allowance per week in 2015). People receiving care at home can claim long-term care support to help cover their care costs, if necessary, alongside an income support claim which helps with basic living costs.

Long-term care property loans

Demographics

Figure 22  

Figure 23:    

Section 6 – Tax Funded Services and Benefits

The Department delivers a range of "tax-funded" benefits that are funded directly by the States of Jersey, shown in Table 24.

2014  2015 £000  £000

Income Support: Weekly Benefit  73,844  73,024

Income Support: Residential & Nursing Care Fees  8,865  (135)

Income Support: Transition (Protected) Payments  421  344

Income Support: Special Payments  1,570  1,196

Income Support: Cold Weather Payments  417  398

Income Support: Total  85,117  74,827 Benefits  

Christmas Bonus  1,521  1,574

Food Cost Bonus  307  302

Cold Weather Bonus10 132  218

Jersey 65+ Health Scheme  250  252

TV Licence Benefit  299  295

Other Benefits (under £100,000 each)  213  175

Contribution to Supplementation – Social Security Fund  63,700  65,300 States Grant

Contribution to Long-Term Care Fund  13,383  19,502

Table 24: Tax-funded benefit expenditure (excluding administration) for 2014 and 2015.

Tax Funded Services – Back to Work

Introduction

In late 2011, existing employment support teams were brought together to form the Back to Work programme. It was established to strengthen the government's response to rising unemployment and complements our benefits system, which is designed to make work pay, and is a key part of government's strategy of getting people back to work.

The aim of the Back to Work programme is to support people who are actively seeking work, and to help them back into paid employment.

Over the course of 2015, Back to Work has continued to enhance its existing provision in order to provide a swift and flexible response to the needs of both jobseekers and employers. Its role is to:

• Co-ordinate the work of all government employment schemes.
• Develop targeted schemes to support locally qualified jobseekers.
• Build a partnership with employers to provide sustainable job opportunities for locally qualified islanders.

10 An under-accrual towards the end of 2014 resulted in the 2014 amount being understated by £52,000 and the 2015 amount being overstated by £52,000.

Teams and Initiatives

Advance to Work

Advance to Work helps young people looking for work make the transition between education and employment. It provides a programme of general and vocational training, personal advisor support and work experience with local employers. The team's target age group is 16 to 24.

Advance Plus

Advance Plus runs industry-specific schemes for motivated jobseekers aged 20 and over who are registered as actively seeking work. The team combines intensive training, a five-week unpaid work placement and advisor support to improve a jobseeker's opportunities for work.

Ready for Work

Ready for Work is the first point of contact for anybody registering as actively seeking work, and provides a referral service across Back to Work should a jobseeker require additional support. The Ready for Work service provides a range of jobseeking support as well as facilities to support jobseekers to find employment.

Work Zone

Work Zone team of Employment Advisors provide 1 - 1 support for work-ready clients through intensive job- seeking activities and training as well as supporting clients already working part time to find more work.

Work Right

The Work Right team offers support and advice on job-seeking to people who are long term unemployed or have barriers to employment. The team aims to bring their clients closer to finding suitable employment through training and individualised action plans.

Foundations

The Foundations programme was introduced in 2014. It is designed to support jobseekers who are furthest from employment by bringing them closer to, and back into employment. Foundations projects involve working on manual community benefit projects on various sites across Jersey. Work undertaken benefits the community, and is maintenance that would not otherwise have been undertaken with examples being improvements to Island Games sites, National Trust land and the Railway Walk. 2015 also saw Foundations add a small scanning project to its portfolio for jobseekers more suited to office based work.

Foundations provides workers with:

• Experience of work, to improve their general employability in areas such as attendance, positive attitude, teamwork and motivation to work.
• Construction-based skills that include painting and decoration, external maintenance works, and site maintenance.
• Office based skills that include computer and scanning machinery usage and experience with a range of IT packages and skills such as attention to detail.

Occupational Support Unit

The purpose of the Occupational Support Unit (OSU) is to support clients who are unable to engage with the other Back to Work employment provision, and may be deemed either currently or permanently to have significant barriers to employment for one or more reasons. The advisors on this team will support their clients through referrals to relevant supporting agencies, such as Drug & Alcohol or Mental Health Services, and work in partnership with Probation or other services where require.

Financial Incentives