Social Security additional contribution payments (FOI)

​​​​​Request

I am in the position that I have paid my required 46 years of Social Security (as of January 2023) and have to continue to pay until I elect to take my pension, should I decide to do so before I reach my retirement age.

A

What are these additional payments to Social Security, that I and several of my contemporaries are obliged to make, used for and who benefits from these payments?

B

The Fiscal Policy Panel acknowledges in their November 2023 Report that there are more funds in the Social Security Fund than the anticipated reserve "The reserve has been built up predominately through returns on investment and surpluses in the Social Security Fund – due to contributions being collected at a rate higher than the ‘break-even’ rate". As this is the case, why am I forced to contribute, when I have reached the legal requirement, without receiving any additional benefit myself?

Response

A

Information is publicly accessible on www.gov.je. People who pay contributions up to pension age may be eligible to claim one or more contributory benefits, according to their circumstances.

Social Security scheme (gov.je)​

You pay in contributions and the scheme pays out contributory benefits at times when you might not be able to earn a living, such as:

• when you have an illness or disability
• if you are starting a family
• if you are caring for someone
• if your partner dies
• if your employer goes bust
• in old age

Benefits that are currently available:

The attached table shows all the contributory benefits currently available.

Benefits.pdf​

These benefits are paid based on how much you have contributed (your contribution record) and the rules of that benefit. Contributory benefits do not take into account your level of income or your savings.

A small proportion of the contributions paid also go to the Health Insurance Fund where they are mainly used to reduce the cost of GP consultations, provide free prescriptions and help provide other primary care services with GPs and pharmacists such as flu vaccinations and diabetic supplies.  

The contributions made by individuals do not go into a ‘personal pension pot’, but are used to fund a wide variety of support for residents insured under the Social Security or Health Insurance schemes. 

​B

The Social Security Reserve has been built up since the late 1990s to prepare for the significant increase in the number of pensioners (and therefore pension payments) expected during the 2020s and following decades.  There were 18,500 people over pension age living in Jersey in 2021 and this is expected to peak at 29,500 during the 2040s and 2050s.  Please see the following link to the published 2021 Social Security Fund actuarial review:

r.96-2023.pdf (statesassembly.gov.je)

The Social Security (Jersey) Law 1974 insures every Jersey resident above school leaving age and requires contributions to be paid by them up to their pension age (or early pension age if the person chooses). 

Social Security (Jersey) Law 1974 (jerseylaw.je)​

Although the value of the old age pension is capped at a maximum value, people who have completed 46 years of insurance do continue to receive support in the form of medical benefit, pharmaceutical benefit and other Health Insurance Funded Services. ​