The Committee for Employment & Social Security has submitted a Policy Letter recommending an increase to the contributory benefits funded from the Guernsey Insurance Fund and the Long-term Care Insurance Fund. If the proposals are agreed by the States, contributory benefit rates will increase by 6.8% from 1st January 2024, which is in line with the annual rate of 'core' inflation (RPIX) for the year to 30 June 2023.
In addition, the Committee is recommending a continuation of the planned gradual increase of contribution rates that was approved, in principle, by the States in October 2021. This plan has subsequently been reviewed annually, in consultation with the Policy & Resources Committee, to ensure that the need for increased contribution rates remained and that it aligned with the outcome of the debate on the Tax Review.
The Committee is also seeking direction from the States to develop detailed policy proposals for a progressive restructuring of the social security contributions system. These policy proposals will be based on a number of principles set out in the Tax Review and will take into account any relevant decisions arising from the States' consideration of the Funding and Investment Plan in October.
Deputy Peter Roffey, President of the Committee for Employment & Social Security said:
"The Committee is proposing that contributory benefit rates for 2024 be increased in line with the cost of living in order to maintain their value in real-terms. If approved by the States, the weekly rate of a full States pension would increase by £17.01 to £267.23.
The Committee is also recommending that the third step of its ten-year plan to gradually increase social security contribution rates is taken in 2024. This plan is essential to secure the long-term financial sustainability of the Guernsey Insurance Fund and the Long-term Care Insurance Fund. However, the Committee is keen to explore whether the same amount of additional revenue could potentially be raised in a more progressive way by restructuring the social security contributions system along the lines set out in the Tax Review. Before starting this work, we're asking the States if they support this general direction of travel."
In addition, the Committee has drawn attention through the Policy Letter to its plans to reduce the maximum age of an individual's child, in respect of whom family allowance contribution credits are awarded, from 16 to 12 years old. While the Committee considers it a valid personal choice for parents who can support themselves financially to leave the workforce in order to fulfil childcare responsibilities, the Committee does not think it's fair, in most cases, for the pension entitlement of parents of children attending secondary school to be subsidised by those Islanders who are economically active.
The Committee intends to introduce a scheme to protect the contribution records of some parents who would be affected by this change, including parents who provide home education for their children or whose children have additional care needs.
To ensure that parents who may be impacted by this change have sufficient time to prepare and, if they wish, to take measures to protect their contribution records, the Committee intends to introduce these changes with effect from 1st January 2025.
The Committee is also proposing an amendment to the Social Insurance (Guernsey) Law, 1978 to allow for unmarried bereaved parents to claim a widowed parent's allowance. Widowed parent's allowance is currently only available to parents in a legal union. This change is necessary to ensure that it is compliant with the European Convention on Human Rights following two successful legal challenges in respect of the equivalent benefit in the UK.