Thursday 29 September 2016
The Committee for Employment & Social Security has produced its annual report for next year's benefit and contribution rates. The proposals will be debated by the States at the beginning of November following the 2017 States Budget.
Old age pensions will increase by £1.64 per week from January 2017, to £206.09 for people with a full contribution record. This is an increase of 0.8% and is in line with the pensions uprating policy that the States approved last year. 0.8% being approximately one third of the difference between the June 2016 RPIX figure of 0.6% and the December 2015 median earnings index of 1.3%.
"We're very aware that the proposed pension increase is not as generous as some would like, although it follows the States-approved uprating policy", says Deputy Le Clerc, President of the Committee for Employment & Social Security. "One of the main things that people worry about is that the pension keeps up with the cost of living. And although the increase is 0.8%, the cost of living for the year to June was 0.6%."
The 0.8% uprating applies to all contributory benefits, except for long-term care benefits, which will increase by 0.6% for 2017.
Contribution rates will increase from January 2017, resulting from previous decisions made by the States.
In line with a decision of the States made in November 2015, the contribution rate for employers and employed persons will increase by 0.1% each in order to fund the new package of parental benefits, which are being implemented on 1st January 2017.
Following the February 2016 States debate on the Supported Living and Ageing Well Strategy, the previous States agreed that the contribution rate should be increased by at least 0.5% from 2017 in order to improve the sustainability of the Long-term Care Insurance Fund. Until more is known about the future scope of the Long-term Care Insurance Scheme, the Committee is proposing the minimum increase of 0.5% for 2017. This increase will apply to all classes of contributors, including pensioners. The extra 0.5% will not apply to employers, as they do not contribute to the Long-term Care Insurance Fund.
In addition, the Committee's main recommendations are to:
- Increase long-term care benefits and non-contributory benefits, excluding family allowance and the supplementary winter fuel allowance by 0.6%, being equal to the June 2016 RPIX figure. The rate of the winter fuel allowance follows the cost of fuel, light, and power, reported in the States of Guernsey's Inflation Bulletin for June 2016, which reported an annual decrease of 5.9%. The fuel allowance will be £26.03 from the end of October 2016 to end of April 2017.
- Reduce family allowance by £2.40 per week per child from 1st January 2017. The benefit had been frozen at £15.90 since 2013, in line with the views of the previous Social Security Department, and the views of the States during the March 2015 debate on the Personal Tax, Pensions and Benefits Review. The States requested that the Committee make this reduction to £13.50 during the States debate in November 2015, on the then Education Department's Policy Letter on the transformation of early years education. This was in order that the cash limit for the Committee for Education, Sport & Culture could be increased to part fund the new universal entitlement to pre-school education. A part of the saving generated from the reduction in family allowance will be transferred to the supplementary benefit budget for 2017, in order to ensure that families in receipt of supplementary benefit will not be affected by the reduction in the family allowance payment.
- Increase the prescription charge by ten pence to £3.80 per item for all those who are not exempt from paying the charge.
