States Meeting Transcript - 18th June 2014

STATES OF JERSEY OFFICIAL REPORT WEDNESDAY, 18 JUNE 2014

COMMUNICATIONS BY THE PRESIDING OFFICER ......................................3 Deputy Bailiff – appointment of Mr. T.J. Le Cocq , H.M. Attorney General..................3 The Bailiff :....................................................................................3

PUBLIC BUSINESS – resumption ...............................................................3

1. Draft Social Security (Amendment of Law No. 7) (Jersey) Regulations 201- (P.73/2014)................................................................................3

1. Senator F. du H. Le Gresley (The Minister for Social Security) ..........................3

1. Deputy J.H. Young of St. Brelade:.......................................................6
2. Deputy G.P. Southern of St. Helier:......................................................7
3. Deputy R.C. Duhamel of St. Saviour"....................................................8
4. Connétable J.M. Le Maistre of Grouville :..............................................10
5. Deputy G.C.L. Baudains of St. Clement : ...............................................10
6. Deputy M.R. Higgins of St. Helier:.....................................................10
7. Deputy M. Tadier of St. Brelade:.......................................................11
8. Senator F. du H. Le Gresley:............................................................12

2. Senator F. du H. Le Gresley:............................................................14

2. Jersey Financial Services Commission: appointment of Chairman (P.80/2014) ......15 [Debate proceeded in camera] ................................................................15

ARRANGEMENT OF PUBLIC BUSINESS FOR FUTURE MEETINGS ....................16

3. Deputy J.M. Maçon of St. Saviour (Chairman Privileges and Procedures Committee):.16

1. Connétable P.J. Rondel of St. John : ....................................................17
2. Senator P.F.C. Ozouf :..................................................................17
3. Deputy J.H. Young of St. Brelade:......................................................17
4. Deputy R.G. Le Hérissier of St. Saviour:...............................................18
5. Deputy J.M. Maçon:....................................................................18
6. Deputy J.H. Young:....................................................................18
7. Deputy J.P.G. Baker of St. Helier : .....................................................18
8. Senator P.M. Bailhache : ................................................................19
9. Senator F. du H. Le Gresley:............................................................19
10. Deputy J.H. Young:....................................................................19
11. Deputy J.A. Martin of St. Helier:.......................................................20
12. Deputy S. Power of St. Brelade : ........................................................20
    13. Deputy J.H. Young:....................................................................21
13. Senator P.F.C. Ozouf :..................................................................21
14. The Connétable of St. John:............................................................22

16. Deputy M. Tadier :......................................................................23

ADJOURNMENT................................................................................23

[9:30]

The Roll was called and the Dean led the Assembly in Prayer. COMMUNICATIONS BY THE PRESIDING OFFICER

Deputy Bailiff – appointment of Mr. T.J. Le Cocq , H.M. Attorney General The Bailiff :

Before we resume on public business, this is one matter I would like to inform Members of, that the Queen, on the recommendation of the Lord Chancellor, has approved the appointment of Mr. Timothy Le Cocq as Deputy Bailiff in succession to Mr. Bailhache . [Approbation] Well, I do not think I need to add to that other than to wish Mr. Le Cocq every success in his forthcoming appointment, which he will take up in the New Year following my retirement and the appointment of the new Bailiff . Very well.

PUBLIC BUSINESS – resumption

1. Draft Social Security (Amendment of Law No. 7) (Jersey) Regulations 201- (P.73/2014) The Bailiff :

Then we return to Projet 73 - Draft Social Security (Amendment of Law No. 7) (Jersey) Regulations - lodged by the Minister for Social Security. I will ask the Greffier to read the citation.

The Greffier of the States:

The Draft Social Security (Amendment of Law No. 7) (Jersey) Regulations. The States, in pursuance of Articles 50 and 51 of the Social Security (Jersey) Law 1974, Article 3(3) of the Income Support (Jersey) Law 2007 and, to the extent that these Regulations amend the Cold Weather Bonus (Jersey) Regulations 2012, the Order in Council dated 28th March 1771, have made the following Regulations.

1. Senator F. du H. Le Gresley (The Minister for Social Security)

On 8th June 2011 the States took a decision to increase the States pension age from 65 to 67. The proposition I am presenting today seeks to put into force that decision. These Regulations will change the definition of pensionable age from 65 to 67 and will do so gradually by 2 months a year, starting in 2020 and ending in 2031, when the state pension age for all working age people will be 67. People who wish to take a reduced pension and draw all their old age pension early may still do so, and the age at which a reduced pension can be claimed will also increase on a sliding scale from 63, as it currently stands, up to 65. The contributions required for a full pension will also increase, from 45 years to 47 years. So the decision we took to increase state pension age was robustly tested in a debate which lasted all day. Despite the length of the debate, there was broad consensus that the problem of how to fund future pensions needed to be tackled and the principle of increasing the state pension age was rarely opposed. Most of the heat in the debate revolved around the amount of information available to Members, a perceived lack of public consultation, unease about the implications for manual workers or those with poor heath and the lack of a discrimination law. That debate was 3 years ago and it is no longer reasonable to argue that this is a rushed decision. However, it is appropriate that I should present the key arguments again and also update Members with recent developments. There are 2 linked key factors, I think, which persuaded the Assembly to increase the state pension age. The first is the ageing population, which I will come back to; and the second is the long-term sustainability of the Social Security Fund. We have recently received the U.K. (United Kingdom) Government's Actuary's report which shows that in 2016, just 2 years away, the funds will reach break-even point, which means that the amount of money raised in contributions is matched by our expenditure on pensions and other contributory benefits. This review was carried out on the basis that the pension age will rise from 65 to 67 over the period 2020 to 2031. The Government Actuary presented their report on the financial condition of the Social Security Fund as at 31st December 2012 in a session open to all Members on 9th April of this year. Those Members who attended may recall the warning that even with a state pension over 67 further action must be taken, otherwise the Fund's reserves will be exhausted by 2046. We were advised to consider what additional steps to take in 2016 following the next actuarial review. Analysis by the Actuary suggests that increasing the state pension age will reduce the expenditure on pensions from the fund by more than £27 million a year by 2032. Analysis also shows that if the pension age stayed at 65, the break-even contribution rates would rise to 15.6 per cent by 2042. So, returning to the ageing population: the demographics underpinning this situation are now well understood. Back in 2011 life expectancy at age 65 was calculated at 21½ years for a man and 24 years for a woman and this was set in increase over the next 30 years. The current reports from the Office of National Statistics have revised these estimates upwards and show the current group of pensioners will live longer than predicted in 2011 and life spans projected for the baby boomers have increased again. Men reaching 65 in 2042 are estimated to live a further 25 years and women a further 27 years. At the same time, as longevity has increased, birth rates have fallen. Not only do we have a future where more people are drawing a pension for longer but in our pay-as-you-go scheme, there are fewer working age people paying for it. This changing mix of old and young also has consequences for businesses and our economy. In 2011 some Members were concerned that retaining older people in the workforce will take job opportunities from younger people. However, the long-term problem is not one of job shortages but rather of skills shortages. A discussion paper for New Zealand quotes the following figures from the O.E. C.D . (Organisation for Economic Co- operation and Development). These numbers, I think, describe the situation succinctly: "Over the past 25 years, 45 million workers retired in O.E. C.D , countries and were replaced by 120 million baby boomers. In the next 25 years 70 million workers are predicted to retire, to be replaced by only 5 million labour market entrants." So, put simply, in the last 25 years an extra 75 million workers entered the workplace, while in the next 25 years there will be a net decrease of 65 million workers. The prediction is that in the U.K. by 2020 one-third of all workers will be aged over 50. So our long-term challenge is therefore not one of unemployment. Instead, we will need to encourage and enable older people to stay at work longer. Back in June 2011 this scenario was, in principle, rarely opposed. There were also concerns about the lack of a discrimination law. Seven different Members spoke on that issue. But since 2011 the Discrimination Law has been adopted by this Assembly. Race discrimination will be operational in September this year and sex discrimination is due to be implemented in September of next year. As I recorded in my report, age discrimination will be consulted on during 2015 and will be in place well before 2020 when the increase to the state pension age first starts to take effect. Aside from discrimination, it is also right to consider the ability - physically and mentally - of people to work for longer. Of course we should acknowledge that people already do work past the current pension age. The latest census

shows one in 7 people over pensionable age in Jersey is economically active. [9:45]

Of these, three-quarters are employed and a quarter are in self-employment. In addition, the trends produced by the U.K. Office of National Statistics show that not only are people living longer but they are enjoying good health for longer. The gap between the life expectancy of different socioeconomic groups is closing. So, to summarise: many people will be fit to work at older ages, many older people want to work and already do work, and employers will be motivated to offer employment geared to older workers to fill the skills deficit they will be facing. I do accept, however, that this will not be true for everyone. Some people will find themselves in jobs they are no longer suited to as they age and this is already the case with the current pension age of 65. But

the solution is not to hold the pension age where it is because this would place a greater burden on the current generation of workers and would not provide any extra help to those who are already struggling to remain in employment. As part of the move to increase pension age, Social Security will play a key role in providing the extra help by supporting older workers and those with ongoing health conditions to find safe, suitable work. We have built-up considerable expertise in helping people back to work over the last 2 years, and as unemployment levels start to drop we plan to refocus these existing skills, knowledge and employee relationships to assist older people and those living with long-term medical conditions to find and retain appropriate work. Some people may need to develop new skills, particularly if they wish to move on from stressful or physically demanding jobs. Here again the Social Security Back to Work team will play a role in supporting people through this process. Needless to say, there will always be some people for whom work is not an option and we already have in place a benefit system which supports people with health conditions and disabilities. Increasing the pension age reduces the pressure on the Social Security Fund and ensures that we will be able to continue to provide appropriate incapacity benefits. The last of the issues which caused concern in 2011 was lack of consultation and this was certainly a concern I shared at that time. When the States voted to increase pension age there was criticism that the public and some Members did not know what we were doing and that recent surveys did not ratify the proposition. However, 3 years since the decision of 2011 the impact of the ageing population has been widely reported in the media and local and national headlines such as "silver tsunami", "pension time bomb" are phrases we are hearing more and more. Of course, much of this publicity comes from the U.K. where the increase in the state pension age not only goes further than our amendment, up to the age of 68, but also goes up faster. As I have pointed out in my report, the U.K. will achieve a pension age of 67 in 2028 and are set to reach 68 by the mid-2030s, and 69 is proposed for some point in the 2040s. Locally, the public sector public scheme P.E.C.R.S. (Public Employees Contributory Retirement Scheme), has also been in the news recently following a major review. The P.E.C.R.S. trustees are finding their scheme difficult to sustain as people live for longer and the fund is asked to pay out more. A key part of the P.E.C.R.S. proposal is to fix the pension age to the state pension age, basing these projections on the rise to age 67. So I am now comfortable that people are aware of these plans and that Islanders have had sufficient notice to start planning for their older age. When I was reading Hansard of the report of June 2011 debate, I noticed that the Constable of St. Lawrence reminded us of the good practice guidelines around States consultation, that consultation cannot be used as a tool to duck difficult decisions and should not be used in cases where the result would not alter the decision, where government has to follow a particular course of action. I believe this is where we are today. The pressures on the fund, longevity, pension support ratios and intergenerational fairness all suggest that increasing the state pension age is the right decision. Due to the foresight and prudence of our predecessors we currently have a very healthy Reserve Fund. Undoubtedly, the reserve can be used to help us adapt to the changes that we need to make to the long-term funding of state pensions. However, there is no getting away from the fact that the underlying increase in the cost of pensions will rise over the next few decades. Increasing the pension age to reflect the increased life expectancy that we are all already enjoying is just one of a range of measures that we need to take to plan responsibly for the coming years. It will not remove the need for increases in the contribution rate but it will reduce the impact of those changes at a time when there will be pressure in many other areas of public funded services. In conclusion, this law change will bring into force a much needed course of action and one which has been replicated in countries all around world. We will be taking action to ensure the value of the state pension, to protect the sustainability of the social security fund and to protect, in particular, future generations from the

burden of high contribution levels. I propose the Regulations in the First Reading. The Bailiff :

Is the principle seconded? [Seconded]

The Bailiff :

Does any Member wish to speak on the principles?

1. Deputy J.H. Young of St. Brelade :

I think it is a hugely important subject and I can absolutely see why the Minister for Social Security has acted to bring Regulations to take remedial action to address the financial projections. My fear is that this, I think, is a sticking plaster measure. I was not, obviously, in the States when the substantive debate took place; the proposition is attached as an appendix in these Regulations. It sets out very clearly some of the issues. When I look through I find that there remains still a very, very big agenda of work to be done. I do not think Members should conclude in any way that by approving this measure today is somehow going to sort out the pension situation for the future. I cannot think of anything more important, particularly looking at the demographics. It is important for our economy, and the social fabric and cohesion of society that we have in place proper arrangements for people in retirement and towards the ends of their lives. It is wrong, in my view, that only States workers have access to a decent occupational pension scheme, and it has long been on the agenda that we need strategies and policies to ensure that those people who cannot get into such schemes as that also have access to improved pension arrangements. What we find is that at the moment they are dependent on fixed contribution schemes where they face low pensions, losses due to admin charges being layered upon their contributions and taken out, churning of investments and all those sort of things. Obviously the opportunity is there in a state scheme not to do that. The opportunity is there in a state pension scheme to so arrange things that things are done much more in the interest of those people that are members of those schemes. Of course, in the U.K. that has been recognised in, for example, many years ago, the graduated pension scheme that was introduced in the 1960s was an attempt to address the very issue that I have spoken of. There was a basic state pension and then there was a graduated pension scheme on top of that to which workers who did not have access to occupational schemes could contribute as an option. Of course, we do not have that, and what we have got here is an arrangement at the moment and there is a situation where we have an unfunded scheme operating on a pay-as-you-go, where 75 per cent of the contributions each year go into pensions. We do not have a long term strategy, as it were, it is not long-term funded, and we have rules that say you have to clock-up 47 years before you can acquire a full pension. Of course, with retirement at 67 that means that at 47 years you have effectively got to establish a clean contribution record from the age of 20. I think there is no question that that was definitely in line with the practice when people were leaving school at 16 and so on and going into working life effectively at younger years when the pension scheme was introduced. When that

scheme was introduced it was very, very, if you like, visionary. I think, now, we have lived off that for all these years and it is time a fundamental review took place on the future pension scheme. It is a job for the new Minister for Social Security. I set that agenda now for whoever it is that takes on that, because I think this measure, an important one, to make sure we do not run out of money, is a sticking plaster measure. Of course, the reality is that a few people will be able to clock-up full pensions of 47 years, and I do not know what the figures are but I remember seeing that certainly less than 80 per cent of people at the moment are getting a full pension and that percentage will reduce over the years. It is not an answer. In the U.K. of course their pension scheme is that you need 30 years to qualify. Of course, there are options in the U.K. that you can buy back added years on very favourable arrangements. When I last looked at the figures I think the payback period was some 4 to 5 years that you could get a pay back on, and we do not have any such arrangements here. It is a highly inflexible scheme, as I have spoken about in the States before. The system at the moment provides no statements to people throughout their working life to tell them where their pension accrual is, and they are often left to find out within a year or 2 years of retirement: "Sorry, you have got a shortfall: what can you do about it? Nothing." I think this is desperately important to be put right in the future. There ought to be options, there needs to be, I think, a thorough review. There are all sorts of other issues. For example, at the moment we have got a group of women who had options to retire at 60 and so on; what are the rules about those? I cannot see any mention of that. The rules about reciprocity with U.K. pension schemes, where people have an employment contribution record in the U.K. which is insufficient for them to take pensions. In the U.K. you can only take a pension, I forget whether it is 9 years or 11. You have to have 9 years or 11 years contributing, I think, in the U.K., in order to be able to accrue a pension there. What are the rules about reciprocity? Of course, when I look back and also it is highlighted for us, if we look at page 26 in the proposition, we have there a paragraph in the last States discussion: "Initiatives to encourage people to work longer." What do I see? Age discrimination, that is what. I am delighted about that. I really encourage that to come forward as soon as we can. But I also see tax breaks for wages earned at pension age. I see about strong focus on people phasing-out employment towards the end of their lives. Of course, this could help youth unemployment, because the reality is that people want to make changes, generally in their post-50 years, to be able to do things like phased progression of their working hours and so on, which can free-up opportunities for young workers to come on board. It is equally true that many, many want to carry on working way beyond. It is ludicrous that when they do that they cannot receive a pension benefit of such arrangements. I met the other day a gentleman in his nineties, still working. It is a highlight, I am saying, how people in their later years can really achieve great satisfaction from the working environment, and it contributes to good health, too, as page 28 says. However, yes, we have an inflexible scheme. I want to see, in future, a review, a root and branch review, in the next term, the next government, and so I think this is a stopgap solution. I shall support it but please let us not convince ourselves that this is the solution to the future of pensions.

2. Deputy G.P. Southern of St. Helier :

I fear we are just going to quietly let this one pass on its way. It is a significant issue that I think still deserves some attention. Unlike the Minister who, I do not know if Members noticed, mentioned the word "consultation" and then glided over it and said that there are lots of headlines around, people are aware of, I think he said the "pensions' time bomb" and stuff like that, so people are informed.

[10:00]

That is not the same as: "People have been consulted." The consultation has not happened at all, either here or in the U.K., because as the Minister correctly pointed out, consultation must be real consultation. You have got to present some alternatives. Where were the alternatives? No, not been thought of. "This was inevitable, inevitable" says the Minister. "This is the way we had to go. There are no alternatives." Well, of course there are alternatives. We have not seen those and we have not had that consultation to say: "Would you rather pay more contributions rather than have to work an extra 2 years or 4 years?" This is the start of the change, not the end of the change. Just imagine yourself. We are saying we have got the staff to get people the softer jobs as they come towards the end of their lives. No, no. The number of cases I see with a 55 year-old manual labourer unable to work, unable to train up to do something else and really very little for him there, going on to benefit; long term or short term sickness. Short-term sickness then on to long-term sickness for 5 years. Now, instead of 5 years call that 10 years, because he is supposed to work for longer and longer and longer. It is not just the manual worker; that is the most obvious example where people cannot work into their senior years. From my own experience and from my wife's experience, the teacher over 60 faced with going into the classroom: another morning, another morning. Can you imagine a 67 year-old? There may be some who can do it but for most teachers, they are worn out by the time they are 60. They are all too glad to get out if they can. Teaching is a young person's game. I think perhaps the same applies in nursing. You do not want to be doing shift work in the hospital when you are 67, 68, 69. You want to be able to put your feet up. Sorry. Where was the consultation about this as one alternative instead of another alternative: work longer? I think you would have seen some very sorry looking faces when it was suggested that people have to work longer and take longer in order to qualify for a full pension. As the previous speaker said, this may well lead to more partial pensions and more load on income support, et cetera. The Minister suggested that this was one part of a package of measures which need to be engaged, but look at the figures. This one produces very little difference in the size of the fund. It is a marginal, minor difference. It is playing around with the edges. We need to look fundamentally at our overall business plan on the Island. That is the reality. The business plan is broken. We can no longer be a low tax, low spend economy because the demands of the demographic suggest we will have to spend more, have to spend more. We have to look at the fundamental model and say: "Is it working?" For example, the minimum wage set where it is. People work for the minimum wage and receive benefit because the minimum wage is set too low. Whether it is income support, whether it is a rental component or whether it is your basic living components, people cannot afford to live in Jersey on the minimum wage. What does that do? That gives us a bill for income support at £90 million a year. Is that really what we want, to support in-work poverty? Because that is what we are doing. No. Take a root and branch examination of what we are doing and let us look at the minimum wage. Let us look at the living wage and start altering that. Let us make work pay. Now there is a thought. Often said and said by Right and Left. It has become a cliché. But let us make work pay, and that entails moving, shifting, minimum wage, shifting the whole basis on which we run our economy. There we are. Unless we look at the fundamental basis of our economy we are not going to solve this problem. At the moment we have got 3 contributors into the Social Security Fund which pays for the basic needs of pension: the employer contribution, the employee contribution and the States contribution. What is the States contribution? Supplementation that actually just tops up the sum from taxpayers' money. Again, £60 million or thereabouts, looking at what can we do about that? Could we do something about that £60 million supplementation? I think we could. Can we do something about the income support bill at £90 million? That is a total of £150 million, just moving around, shifting around, because of the state of our economy. Let us look at that, let us do some fundamental thinking on that, and then we might have some solutions to the ageing demographic, but this is just fiddling with the edges and will cause significant misery in our

population.

3. Deputy R.C. Duhamel of St. Saviour "

In keeping with the last 2 speakers I do agree with them that I think that despite the exceptionally hard work that the department and the Minister has put into this particular project, which carried on from Senator Gorst 's efforts when he was at the Social Security Department, it does represent a bit of a sticking plaster on a much, much larger problem. If we look at the graphs of the expectation of your life, you cannot fail to notice that the rate of increase is increasing. So that, in essence, means that there are fundamental things happening to the human population which inevitably will give rise to changes in the social customs and support systems that we have in place to support ourselves. If people read, as I do, medical journals and keep a weather eye to what is happening with medical research people will have noticed that we are on the verge, I think, of solving the ageing problem. Now, by that I do not mean that everybody is going to live for ever, but we are certainly reaching a stage in medical science and research where the advances are taking us to a point that we should be able to expect the increase in longevity to go up by an even greater amount than it is drifting upwards at the moment. When the Bismarck-style pension was first thought about it did not contemplate - for those persons who were putting it into effect - people living for ever. In essence, your pension and retirement life was supposed to be a small proportion of your total life. Those

ratios are radically changing. We can see that from the figures in the report, from 1982 a man was expected to last another 14.2 years and we are now projecting a 7-year increase at 2014 and that is steadily rising. What happens if the medical research suddenly comes forward and allows us to stay in the state of health that we arrive at in our 20s or 30s, and to keep within those health bounds for another 50, 60, 70 years? It sounds farfetched but this is, in essence, what is being discussed by all jurisdictions around the world. The number of centenarians is due to go through the roof. You can see those numbers are drifting up quite significantly in the U.K. population projections, and similarly in Jersey. So in my mind does it make sense to commit people to an expectation of a quarter of their lives, or perhaps a third of their lives, when they are still relatively healthy, because medical practice shows us at the moment that it is only in the later part of our lives that we tend to get hit by the medical wall, if you like, of things not being able to be repaired for much longer and inevitably death follows. So I think really what is required, as was being intimated by the previous 2 speakers, is a proper root and branch Island-wide , worldwide even, redefinition of what it means to live and what it means to work and how work fits into the workplace. I have suggested for a long time - and by no means the suggestions that I make are not necessarily going to be the only ones that will be put forward but I think they are due some consideration - I have often thought that pensions should not really be considered in a fashion that you get to a particular age and then that is it, you are on to the scrap heap, you cannot do anything else, although you are relatively still healthy and capable of maybe not doing as much manual work as perhaps you did in the past, but certainly a useful member to the working community in training the youngsters to take over your position. That inevitably means that there must be consideration given to phased retirement. I have often thought that instead of getting to the pensionable age ..

The Bailiff :

Deputy , if I can, we have had a number of very wide-ranging speeches and this one is perhaps even wider than some of the others, but we are considering the principles of whether to enact these particular Regulations.

Deputy R.C. Duhamel:

Yes, I am putting it in context. Generally, the drift of what I am wanting to say is that if we are indeed looking at the wider principles, this is a stopgap measure and it will not be sufficient for the future. Other jurisdictions have already realised this, if we look at the reviews that are being suggested for future years, but I personally think that there will be a faster progression for these things to be reviewed than perhaps we have anticipated. I was just wanting to widen it slightly to kind of make that point. We do have strategic planning as an element of the Council of Ministers' Strategic Plan. But to my way of thinking I do not think we think far enough into the future. Inevitably, if we are to be concerned about future-proofing our policies that is all well and good, but I do not think that we should be blithely supporting regulations and propositions that perhaps purport to be a future-proof solution when in actual fact they are not; and mechanisms are not put into place sufficiently fast in order to encourage the longer-term solutions and the future-proofing to be done in a satisfactory fashion to begin to solve the problem in a longer term fashion. Just one final point, if I may, on the working age. If indeed pensions could be considered to be able to be drawn-down in a phased approach, and on reaching a particular age, your working life could be curtailed by perhaps one day in 5 so you worked from 5 to 4 days a week for a number of years, and then to 3 and then 2 and one or whatever. I think a whole essence of different solutions to enable the funding packages to support that particular set of policies would be able to be contemplated instead of the proposals that are on the table at the moment. I will be supporting the proposition by the Minister, however, and the Regulations, but it is on the proviso that - as other Members have already stated - it does not represent, I think, as longer-term solution to the problem as perhaps it could have been. I look forward to the new Government and the new Ministers who will perhaps take up these points with a greater vigour than perhaps previous Ministers have.

4. Connétable J.M. Le Maistre of Grouville :

It is really a point of information really that would be useful to me and perhaps others that are listening. I wonder if the Minister when he sums up could tell us what will happen to the retirement age of women. I am fairly relaxed as to when parity will occur, or if it will occur, but I would be quite interested to know what the plans are with regard to when women will receive their pension.

[10:15]

5. Deputy G.C.L. Baudains of St. Clement :

I rise to agree wholeheartedly with the comments made by Deputy Young. I think a review is urgent and I do hope that in the new Assembly Ministers take that on board and move with it as quickly as possible. Because when pensions first came in, I think that was about 100, 120 years ago, life expectancy was such that the pension was only likely to be paid out for a year, maybe 2 years. Now with increased life expectancy of probably 20 years of pension you cannot stretch that same amount tenfold, it just does not work. So what do you do? Do you raise the retirement age to 80? Or do you make the contributions 40 per cent of a person's income? Or do you have a combination of all 3? It does seem to me that all 3 options are unpalatable. So clearly a fresh approach is needed which is why, as I said, I agree with Deputy Young's call for a review, and some of Deputy Duhamel's comments as well. Obviously I am going to support the proposition but I would like to make it clear that in my view it is only a temporary measure and the problem is likely to get worse as the years go by so we really do need to look at the fundamental issues underlying.

6. Deputy M.R. Higgins of St. Helier :

Like Deputy Young and Deputy Duhamel I do believe that we need to be looking at this in a very holistic way. We need a proper review. The reason why I say that is that there are some fundamental changes taking place in the world today that we have not yet even recognised. I am reading a book currently - it is one of a number that I have been reading on this topic - called The Second Machine Age. We have gone through in the past the industrial revolution and we have moved into an era today where we have computers since about the 1980s, we have the internet, we have the digital age; Jersey is spending money on the digital economy. But what people do not realise are the changes that are taking place at the present time which are going to revolutionise the way in which we work and the way that society is run. For example, if we think of computers, how many secretaries do you see in offices these days? Virtually everybody has a computer, they have a word processor, and they are doing their job. We are now moving into, as I say, the second machine age, and what is happening now is that machines are going to replace many of the professionals. For example, lawyers, the preparation of documents for a legal case, we know that certainly English law is based on precedent and there are many sorts of legal assistants helping the advocates prepare their cases for court and so on. All that information has been digitised and there are programs now that sift through all the cases and can try and bring together all the ones that are going to be relevant. If we think of the accountancy profession, accountants relying on people preparing the accounts and getting everything in order. Well, I know with the accounts that we are now preparing we have a program. You take photographs of documents and because of the program they are put into a particular place. All the information is prepared so much easier. So the point I am trying to make is we are going to see some fundamental changes, not only in the jobs that we have in society and the work that is going to happen in society, and remember that technology in this sense tends to improve productivity, which tends to generate money and the services we need. So the fact that there are less people going to be available in the work force does not necessarily mean that our society is going to be worse off for it and we have to pay more on this and all the rest of it. If we look at Japan as an example as an ageing society, it has one of the most ageing societies there are, and the Japanese have gone for a technological approach to dealing with many of the problems that are facing the elderly. I do not want to get into too sort of crude a detail but they even have systems whereby the loos in people's homes are linked to electronic means which are sending messages to the doctors on what is going through the loo, the liquid and solid waste that is going through, and giving information to the doctors about what is happening. Now, we should be embracing or looking at this new technology and seeing how it can help us, rather than just saying we have to increase the working age, that people have to work for longer unless they have a pension. I am only briefly touching on the topic but I can tell you this House and this Island needs to start looking at the changes that are going to take place because it is going to have a fundamental change on the way we go about, and Jersey's role in the world. That is coming much quicker than you think.  We already have computers that can beat the world chess champion in terms of what they are doing. We have computers that are now believed to have gone through the Turing test. Artificial intelligence in machines has come a long way. As I say, we are going to have driverless cars on our roads within 20 years; Google are already doing it in the United States, and these are going to solve many of the problems that we have. What I am trying to say is we tend to look at things in a very narrow, short-term view, and there is not enough strategic long-term thinking going on. So, yes, this measure is before us and the regulations are before us at this time, and no doubt it will be approved by the House, but the truth of the matter is the next Assembly and the next Ministers need to look much further. We have reports on Kinsey and everything else but we need to start looking at these fundamental things because life as we know it is changing and changing quickly.

7. Deputy M. Tadier of St. Brelade :

It is true that computers have come on in leaps and bounds, we have computers that can play chess and beat world champions, we have computers that can steer satellites, but we have not yet found a computer that can resolve the issue of States reform in Jersey. [Laughter] Or at least to have a computer that could convince States Members to give up perhaps their blinkered views and long- held beliefs on that, but we live in hope maybe one day that computer will exist. I have always found it a cruel irony that for many arguably the point at which one takes retirement is not the optimum in life at which you can enjoy that retirement. That does not mean that of course it is not appreciated, but it is also to be noted that for a small but sizeable minority who pay into the pot all their lives may not even get any pension at all if they die suddenly either before the retirement age, at retirement age, or very shortly after. It has also occurred to me that that is a very socialist principle, is it not, that we all pay into a pot equally; at the end of it we do not know what we are going to get but we do it because that is what society has decided is correct. So even if you die when you are 65 and do not get a penny, your neighbour who lives to 95 and perhaps has not paid in as much as you will still get her pension all the way through. We do not seem to have a problem with that as a society; that is fine, that is just the way it works, that is perfectly acceptable. It may not be sustainable and clearly that is what the Minister is having to bring forward, these last parts of the amendment. If we accept that, why do we not accept other models? We have talked about the need for radical change in our society but perhaps we should not have any retirement age at all, perhaps we should all be getting a pension during the whole of our lives, so do not wait until you get to 65, why not be able to enjoy your retirement when you are between the age of 30 and 40 before you start your career in politics or in banking or whatever it is. Of course, these things will need a fundamental rethink but they should not be that shocking, especially when we have adopted a very socialist/centralised communist model in our pension schemes. So let us not be shocked by anything. It was Harold Lasswell, the American political commentator who said that politics is

about who gets what, when, and how. This is very much what we are seeing here. We hear the opponents from the right who say: "These new groups, whether it is Reform Jersey or whatever, there we go, it is just tax and spend, they want to put taxes up for people and they want to increase public spending." Absolutely we want to increase services and the delivery of services, the quality of services, I want to live a society where everybody can go to see the G.P. (General Practitioner) for example, not be put off doing that because they do not have any money. In the current system we have a disincentive: how perverse is that? We are trying to encourage people to look after their health and into retirement, yet we decide to put a disincentive for people to go to the G.P. That is the kind of world that we live in.

The Bailiff :

Deputy , even by the standard of this debate so far, this is straying a long way from the .. Deputy M. Tadier :

I am coming back to the point, because the point of these Regulations on which they have predicated the actual increase in the retirement age which is being phased-in, is because we have not sufficiently looked at other options. The default position when we are looking at the issue, there is not going to be enough money in the pot, what do we do, put up the retirement age, make people work longer even if they are not capable of working longer in those jobs, even though they not be having other jobs to go into. That is the default reactionary response, rather than saying: "Well, what could we do to increase the money in the pot?" That is what we should be doing and that can be seen as an argument to either reject these regulations, or to vote for them pinching our noses, hoping that very quickly we will have a new Minister. This current Minister I think has done a good job holding the fort and he has had to steer through some very perhaps controversial and necessary amendments as a holding place, but in the future, and very quickly, we need to be addressing these issues seriously. Just to finish the point as to why I will have trouble voting for these Regulations, it is very much the point as to why I will have trouble voting for these Regulations. It is very much because they were not the optimum solution. Far from it, I do not even know if it is a sticking plaster, to be honest, it is certainly not the solution. We should have been bringing forward a solution which was holistic, which did look at replacing a regressive system with at least a proportional system. We know that there is enormous scope within the Social Security Fund to not affect the majority of people who are paying up to the £45,000 cap at their 6.5 per cent, but to increase the cap above that without affecting the majority of the population, delivering better services which would have given perhaps some leeway in the retirement age, it could have allowed the retirement age to stay the same but to have increased the fund and have a truly fairer society in which people do contribute what they can for the greater good.

The Bailiff :

Does any other Member wish to speak on the principles? Then I invite the Minister to reply.

8. Senator F. du H. Le Gresley:

I thank all those who have spoken. I think the general trend was this is just a sticking plaster, stopgap, we need to do more. I totally agree, we need to do more. But this is a move that was recognised and recommended by the Government Actuary, other countries are doing similar by raising the pension age. There is absolutely no doubt that we will have to increase contributions and the question does lie as to where that increase is going to be targeted. We had a discussion yesterday on this very point and my own personal view, for what it is worth - because my own views now do not really matter - is that we should be looking to ask people who earn between the standard earnings limit and the new upper earnings limit to pay greater contributions. I think that is the starting point but even that probably will not be enough in the long term because of the forecast

rates that we will need to introduce in later years. Again, I agree with Deputy Young when he says there are a whole lot of things we could be doing with our pension scheme. I think the issue around being able to buy back years is something that you can currently do, as I said before, but it is incredibly expensive to do so because you pay at the maximum class 2 rate and quite honestly people choose not to take that option because it is cheaper to go out and buy your own pension scheme or make your own investments. But that is something that needs to be looked at. Whether we could pay a pension earlier, which is of concern to Deputy Young in particular, instead of people having to wait for the full 47 years to get a full pension, which is what it will be going forward, whether they could have a pension earlier as they do in the U.K. This would be expensive and certainly would have to be built-in to all the projects for the fund, or a lower pension would be paid. Obviously  the  U.K.  pension  is  £40  I  think  roughly  below  our  pension  so  there  are repercussions for giving people a pension based on a shorter period of contribution. A couple of Members, Deputy Young and also the Constable of Grouville asked about women who receive a pension at 60. This is a very declining group. These were people who were in the old insurance scheme of 1950. The Social Security Law of 1974 replaced that scheme and those women who were in the old scheme started paying contributions, still receive a pension attaining the age of 60. By 2020 those women will no longer be around, they will be people who were 16 in 1974 and the people have known since that date that their pension age is 65.

[10:30]

So we have a very small dwindling number of women who are still working who will receive their pension at 60, but they are protected in the law under Article 25(7), so they are protected. I think those are the main points really. Most Members, as I said, were feeling that this was not enough, we need to do more, and I do not dispute that. This is a starting point and, as I said in my opening speech, we are incredibly fortunate that my predecessors at Social Security - and the States of Jersey of course backing those proposals - have been putting money aside in the Social Security Fund which as at the end of last year had a value of £1.3 billion. There are very few countries, I suggest, around the world who have a state pension scheme that has that sort of reserves built-up. Now, those reserves of course are to deal with the pension bulge which will happen in the 30s and around that time, and they will be drawn-down gradually I am sure, but we cannot reduce that fund to any great extent because we have to bear in mind that our grandchildren and children would also like a pension and we, as perhaps the people who will be enjoying pensions in the next 10, 20, 30 years, cannot take all the money and leave no money in the pot. So it will be all a question of balance, but based on expert advice. With that, I maintain the proposition and ask for the appel.

The Bailiff :

The appel is called for then in relation to .. [Interruption] I invite Members to return to their seats for the appel on P.73 principles, and the Greffier will open the voting.

The Bailiff :

Deputy Hilton, do you wish this matter to be referred to your Scrutiny Panel?

Deputy J.A. Hilton of St. Helier (Vice-Chairman, Health, Social Security and Housing Scrutiny Panel):

No, thank you, Sir. The Bailiff :

Very well. How do you wish to propose the Regulations, together, Minister, on the basis that you have outlined the principles ..

Senator F. du H. Le Gresley:

Yes, together.

The Bailiff :

So you propose Regulations 1 to 11?

2. Senator F. du H. Le Gresley:

I do not propose to go through each one, I think it is pretty straightforward really. The table that appears in Article 7 is the crucial table that will be inserted into the Social Security Law, which gives a clear indication of when pensionable age would be reached, and also the contribution years, reduced pension age for taking a pension early, and I think I am just happy to take questions if people want further clarification. I propose the Regulations en bloc.

The Bailiff :

Are they seconded? [Seconded] Does any Member wish to speak on any of the individual Regulations? Very well, all those in favour of adopting the Regulations please show. Those against. The Regulations are adopted. Do you propose them in Third Reading, Minister?

Senator F. du H. Le Gresley: Yes, and I ask for the appel. The Bailiff :

Is it seconded in Third Reading? [Seconded] Does any Member wish to speak in Third Reading? Very well, the appel is called for then in relation to the adoption of these Regulations in Third Reading. I invite Members to return to their seats and the Greffier will open the voting.

POUR: 40

Senator P.F. Routier Senator P.F.C. Ozouf Senator S.C. Ferguson Senator B.I. Le Marquand Senator F. du H. Le Gresley Senator I.J. Gorst

Senator L.J. Farnham Senator P.M. Bailhache Connétable of St. Helier Connétable of St. Clement Connétable of St. Peter Connétable of St. Lawrence Connétable of St. Mary Connétable of St. John Connétable of St. Ouen

CONTRE: 6 ABSTAIN: 0 Senator A. Breckon

Deputy G.P. Southern (H)

Deputy M. Tadier (B)

Deputy J.M. Maçon (S)

Deputy N.B. Le Cornu (H)

Deputy S.Y. Mézec (H)

Connétable of St. Brelade Connétable of St. Martin Connétable of St. Saviour Connétable of Grouville Deputy R.C. Duhamel (S) Deputy R.G. Le Hérissier (S) Deputy of St. Ouen

Deputy of Grouville

Deputy J.A. Hilton (H) Deputy J.A.N. Le Fondré (L) Deputy of Trinity

Deputy S.S.P.A. Power (B) Deputy K.C. Lewis (S) Deputy E.J. Noel (L) Deputy T.A. Vallois (S) Deputy A.K.F. Green (H) Deputy G.C.L. Baudains (C) Deputy of St. John

Deputy J.P.G. Baker (H) Deputy J.H. Young (B) Deputy S.J. Pinel (C) Deputy of St. Mary

Deputy of St. Martin

Deputy R.G. Bryans (H) Deputy R.J. Rondel (H)

2. Jersey Financial Services Commission: appointment of Chairman (P.80/2014) The Bailiff :

The  next  matter  of  public  business,  and  the  final  matter,  is  P.80 - Jersey  Financial  Services Commission: appointment of Chairman - lodged by the Chief Minister. This is matter which under the law has to be held in camera so, therefore, I will ask the Greffier to read the proposition and then we will go into camera for the debate, and then the vote is in public session again. Greffier, would you please read the proposition.

The Greffier of the States:

The States are asked to decide whether they are of opinion (a) in pursuance of Article 3(2)(a) of the Financial Services Commission (Jersey) Law 1998, to extend the appointment of Lord Eatwell as a Commissioner of the Jersey Financial Services Commission, with effect from 21st April 2015 until 21st April 2020; (b) in pursuance of Article 3(2)(b) of the Financial Services Commission (Jersey) Law 1998, to appoint Lord Eatwell as Chairman of the Jersey Financial Services Commission, with effect from 17th June 2014 until 21st April 2020.

[Debate proceeded in camera] The Bailiff :

Very well then, the appel has been called for in relation to P.80. I invite Members to return to their seats and the Greffier will open the voting.

ARRANGEMENT OF PUBLIC BUSINESS FOR FUTURE MEETINGS The Bailiff :

So that completes Public Business. We now come to Arrangement of Public Business for Future Meetings and I invite the Chairman of P.P.C. to propose it.

3. Deputy J.M. Maçon of St. Saviour (Chairman Privileges and Procedures Committee):

I would like to advise Members that for the sitting of 14th July, we have the addition of P.119 and P.120 in the name of Deputy Southern . Other than that, I am not aware of any other items which are not on the Order Paper and therefore I would like to propose the order for 30th June as is laid out.

The Bailiff :

Presumably with the matters that were deferred from this sitting. Deputy J.M. Maçon:

Yes, I beg your pardon. Yes, Sir. The States has already agreed to take the items proposition in the name of Senator Bailhache first. Can I propose then we take the items that were deferred from this sitting after that?

1. Connétable P.J. Rondel of St. John :

Can I say that given we have more or less booked out today and even tomorrow and all the work we have to do over the next 3 or 4 weeks, can we not fill up the rest of today, if nothing else, with some of the work that has to be done? Is there any way that we can bring any of that forward? This is absolutely ludicrous. We put time aside and we are not using it.

The Bailiff :

I understand the position, Connétable , but I do not think it is practical to bring forward matters out of the blue. Notice needs to be given. So the proposition then is that it is as set out there but with the items deferred from this sitting, which will come in after P.107 and there are the 2 alterations to 14th July. Do you wish to indicate how long is going to be necessary for the 30th June sitting, Chairman?

Deputy J.M. Maçon:

I believe I have already indicated to Members that we will need a continuation the week after. The Bailiff :

Yes, those 3 days plus a further 3 days.

Deputy J.M. Maçon:

Yes.

The Bailiff :

The plan is to start at 2.30 p.m. on the Monday, yes. Very well, anyone wish to say anything? Yes, Senator Ozouf ?

2. Senator P.F.C. Ozouf :

This is probably a point of order but I will seek your guidance. We now have P.118 - Draft Referendum (Composition of the States Assembly) Act - down for debate on the final sitting on 14th July and I see from the proposition that P.P.C. have not, as I understand it, adhered to what the States requested P.P.C. to do which is to include  [Approbation]  .. I think that is from the Constables. The fact is the referendum question would be asked about the Constables. Now, is it going to be in order to amend that proposition to include what the States requested to do?

The Bailiff :

Well, I would have thought so. Yes. I do not have the proposition in front of me, but as I recall it, the proposition is to set out the question which will be asked and of course it is open to any Member to amend that to amend the wording of the question which could include putting in the question that Members had earlier decided should be asked.

Senator P.F.C. Ozouf :

Thank you for that clarification, Sir.

3. Deputy J.H. Young of St. Brelade :

I wonder if I may raise a procedural point, Sir? I do not know if we have decided on it yet but the 30th June sitting was due to have 41 propositions with the addition now of several items deferred from today.

[11:15]

We have some very controversial and major items in that 41, so I think some way should be found to at least ensure we have a fair chance of dealing with those. So my suggestion is that the things that were deferred from today with short notice go on the back of the agenda and not in front of all these other ones that people are prepared for.

4. Deputy R.G. Le Hérissier of St. Saviour :

I wonder, in light of the Minister's comments, could the Chairman of P.P.C. comment?

5. Deputy J.M. Maçon:

Our report makes quite clear why we have proceeded in the way that we did. I would invite Members to read the report before making any  judgments one way or another, as I am sure Members would most advisably do. With regards to where the items from this debate should sit, I am in Members' hands. I suggested they should be second. If Members want them somewhere else, it is up to Members.

The Bailiff :

The normal practice is that matters deferred are put at the top of the list in the following one. That is what Standing Orders normally provide.

6. Deputy J.H. Young:

If I could just clarify, Sir? I am concerned, for example, we have not booked out Friday, 4th July and so we have, at the moment, reserved only morning, afternoon of the 30th, plus 3 days and we now have ..

The Bailiff :

And, Deputy , a further 3 days the following week. So there are 6½ days set aside for this sitting. Deputy J.H. Young:

If I may just clarify further that of course if one looks then at the subsequent States sitting after that, there is an equally horrendous list of matters. My concern is that we really should find a practical way forward on this.

The Bailiff :

Do you want to suggest one? [Laughter] Deputy J.H. Young:

Well, 2 suggestions, Sir. One is that the things deferred from yesterday go on the back end of the agenda for the next meeting because we were given no notice of that at all and the other suggestion is that we reserve in our diary 4th July.

The Bailiff :

Well, it is a matter for Members. At the moment, the Chairman has proposed that the items deferred .. let us take it from Deputy Young, it is probably easier. Deputy Young has now proposed that the matters deferred from this occasion should be put at the back of the list for the next sitting. Do any of those proposers who had those matters wish to say anything before the States votes on that? I think they were the Chief Minister and ..

7. Deputy J.P.G. Baker of St. Helier :

If I may, that does include the aircraft registry and I do not see any particular reason why it would not go to the back of that agenda.

8. Senator P.M. Bailhache :

I was just going to say that the importance of debating the aircraft matters on this occasion was that it would enable the proposed Aircraft Registry Law to be approved by the Privy Council before the summer break. That date has been lost and for my part, I am willing to discuss it with my colleagues, I would have thought there is no reason why all these aircraft matters should not be left over until September. [Approbation]

The Bailiff :

Can I suggest at the moment then that they are put at the bottom of the list and then if, on further consideration, it is possible to leave them until September no doubt you will inform Members at the earliest opportunity. Very well, so we do not need a vote on that. Now, would any other Member wish to raise any other matter?

9. Senator F. du H. Le Gresley:

Yes, Sir, if I may. I would like to ask the Assembly if they would agree that on 14th July, my proposition P.109, which relates to Family Friendly Legislation, could be moved up the Order Paper to follow Deputy Southern 's proposition P.104, which is to do with maternity leave. It seems logical to take my debate straight after that proposition if the Assembly would agree.

The Bailiff :

It is already, is it not? At the moment it is P.104 followed by P.105. Senator F. du H. Le Gresley:

Sorry, Sir. Requesting 109 to move up.

The Bailiff :

109 after 104.

Senator F. du H. Le Gresley:

109 to follow 104.

The Bailiff :

109. Right. Very well, do Members agree to that? Yes. I see. Now, is there any other matter then? Are Members content to take the Public Business as set out?

Deputy J.M. Maçon:

I believe Deputy Young had a question about 4th July.

10. Deputy J.H. Young:

I would like to maintain that proposal to test the Assembly where we could reserve 4th July. The Bailiff :

You want to sit on the Friday?

Deputy J.H. Young:

Yes, Sir.

The Bailiff :

Very well, the 4th July. Is that seconded? [Seconded] We go straight to the vote on that then. If you wish to sit on 4th July as well, vote pour. If you do not, vote contre. The Greffier will open the voting. Have all Members had an opportunity of voting?