£1 million to support Pensioners
Last year States members agreed to hold the benefit budget of the Social Security Department at its 2015 level throughout the Medium Term Financial Plan (MTFP). As Social Security Minister I had to make a lot of tough decisions, carefully weighing up the implications during this time, to identify a £10 million contribution to invest into the vital areas of health and education.
Today, as a result of the economy performing better than expected last year, I am now able to include a total of £1 million of benefits in the MTFP Addition. I have listened to many people’s views and I have made the decision to direct this extra funding mainly to lower income pensioners to help them with their health and general living costs.
A new, targeted Christmas bonus
I am pleased to have been able to lodge a proposition for a new targeted Christmas Bonus which will provide automatic payments to the following Income Support households:
· adults and children who have a significant disability and
· full-time informal carers
I have also identified funding to support the cost of a Christmas Bonus to a broader group of pensioners who don’t qualify for Income Support, but have limited income and savings. This group will qualify if they meet all of the following:
· Aged 65+; and
· Receive a Jersey Old-Age Pension or hold ‘entitled’ status; and
· Ordinarily resident in Jersey; and
· Not liable to pay Income Tax; and
· Have household savings of under £30,000 – excluding the value of the family home and normal household possessions
To smooth these changes, transitional arrangements for 2016 will provide a Christmas Bonus to any pensioner who is a member of the current 65+ health scheme. From 2017, pensioners will need to apply for this bonus – but to make it simpler for recipients, after one successful application the bonus will be automatically paid in future years with no need to re-apply.
Both groups will receive a Christmas bonus of £84.87 in early December each year. By 2019, we estimate that over 5,100 people will be receiving this bonus at a cost of £436,000 per annum.
Relaunching the 65+ Health Scheme
I am very keen that people should be able to look after themselves for as long as possible. By assisting pensioners with the cost of keeping teeth, eyes and feet healthy through regular check-ups and treatment, minor problems can be identified quickly and independence maintained. Extra investment has been agreed in this area and I am happy to say that an additional £200,000 a year was allocated in the MTFP last year.
The claim process for the scheme has now been completely reviewed and we have worked with dentists, opticians and chiropodists to make sure that it will be easy to use and is accessible to all low-income pensioners. I am particularly pleased that in the future the benefit will be paid directly to the practitioner by the Social Security Department on behalf of the pensioner. As a consequence the individual will no longer have to pay the full cost up front and claim later which we identified as a particular problem.
New regulations have already been agreed to relaunch this scheme, which will be available from January 2017. Everyone on the current scheme will be transferred to the new scheme later this year.
Renewal of Food Costs Bonus
Finally, growth funding of £364,000 has been identified to fund a three-year renewal of the Food Costs Bonus scheme. This will provide an annual cash payment of £226.95 to households with incomes above the level to qualify for Income Support, but below that to have an Income Tax liability. This benefit is predominantly paid to pensioner households.
Review of the Social Security Fund
The extra investment in these benefits will help to support today's pensioners over the four years covered by this MTFP. Of course we need to address our short-term financial situation but we also need to be making plans for the longer term. The Social Security Fund was set up in the 1950s to make sure that everyone could enjoy a pension in old age. Since then, we have built up a good level of reserves in the Fund but the number of pensioners will rise quickly over the next few years and we will soon reach the point where the cost of pensions and benefits paid out each year is more than the contributions collected. I am very conscious that we now need to take steps to make sure that the Fund will still be supporting pensioners into the 2050s.
I am ready to face these issues and take the decisions that will soon be needed. A major review of the Social Security scheme is now underway and an initial public consultation is planned for later this year. I hope you will give us your views as we work together to make sure our funds are sustainable in the long-term.