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WRITTEN QUESTION TO THE MINISTER FOR SOCIAL SECURITY BY DEPUTY G.P. SOUTHERN OF ST. HELIER
ANSWER TO BE TABLED ON TUESDAY 26th FEBRUARY 2008
Question
- D o es the Minister have any plans to amend the current statutory provisions linking increases in pensions to the Average Earnings Index and will heundertake to review theposition if theAverage Earnings Index falls behind the Retail Price sIndex,to ensure that pensioners are notmadeworse off relative to RPI,or RPI(pensioner),in 2008 or2009?
Answer
T h e re are no plans to alter the statutory provisions set out at Article 13 of the Social Security (Jersey) Law
1974 which provides for the automatic uprating of all contributory benefits by the Jersey Earnings Index annually. Since 1990, the Average Earnings Index has increased at an average annual rate about 1 percentage point greater than that of the RPI. The graph below plots the two indices since 1990.
Source, Jersey Economic Digest 2007
The members will be aware that the UK government, as part of their pension reform programme, have introduced the Pensions Act 2007 which includes a commitment to link the annual increases in state pension with earnings rather than prices, as has been the case in Jersey for many years. The UK government hope to achieve this by 2012.
From time to time, the increase in RPI is above that of average earnings – this has happened 4 times in the last 17 years. These occasional anomalies do not detract from the general principle that contributory benefits should be linked to wages, and that this automatic link has been of great benefit to pensioners since it was introduced.
Question
- W h at are the Minister's intentions with regardtootherbenefitswhichunlike pensions are not linked to the Average Earnings Index?
Answer
Members will be aware that under the Income Support (Jersey) Law 2007 an annual review of rates has to be carried out. In reviewing these rates statutory provision provides that regard shall be given to changes in the cost of living and in the general standards of living of the community together with other factors that the Minister considers relevant. The component rates in Income Support are set under Regulations and the Minster will provide full details to the Assembly of the basis for any amendments to rates when the Minister brings forward a proposition on the annual review.