Proposed rises to pension and income support payments (FOI)

Request

Please advise why there are proposals to raise the pension by 7.7% yet there are proposals to raise the income support payments by 8.6 %.  This seems utterly discriminatory to the elderly.

Response

As information relating to the calculation of pension rates is already in the public domain, Article 23 of the Freedom of Information (Jersey) Law 2011 has been applied. Please see the links below:

• Pension increase:  Schedule 1, Part 1A – Rates of Old Age Pension:

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

• Income Support proposal:

Draft Income Support (Amendment No. 23) (Jersey) Regulations 202-.pdf (statesassembly.gov.je)

• RPI(pensioner): Statistics Jersey:
  

Jersey Retail Prices Index June 2023.pdf (gov.je)

• Average earnings index: Statistics Jersey:
  

Index of Average Earnings June 2023.pdf (gov.je)

However, a further explanation of this information is as follows.

Can you explain in detail why there are proposals to raise the pension by 7.7% …

The Social Security old age pension is automatically increased each year in line with a formula which is in the Social Security Law.  

This formula guarantees that the old age pension will always increase by at least RPI(pensioner).  

RPI(pensioner) is a measure for inflation specifically produced for pensioner households based on what they spend their money on.   

In years in which prices are rising faster than wages, this protects pensioners and guarantees that the pension will rise in line with the RPI index for pensioners.

In years in which wages rise faster than prices, the pension increase will be higher than the RPI pensioner increase and will look to track earnings increases in the long term, in line with the general economy.

In 2022, wages rose by 6.2% and the June RPI pensioner value was 7.7%.  Pensions rose by 7.7% from 1 October 2022.

In 2023, wages rose by 7.7% and the June RPI pensioner value was 6.8%.  Pensions rose by 7.26% from 1 October 2023.  The 7.26% increase is the midpoint between the wage and RPI increases which ensures that the pension tracks earnings increases in the long-term.

…yet there are proposals to raise the income support payments by 8.6 %.  This seems utterly discriminatory to the elderly

Households, including people of all ages - including pensioners - can claim income support if they meet the eligibility conditions.

All pensioners received a 7.26% increase in their Jersey old age pension this year.  Pensioners who receive income support will also see an increase in their income support benefit from January 2024 if the States Assembly agrees to the Minister’s proposal.

On the 21 September 2023, the Minister for Social Security published proposals for an 8.6% increase in income support benefits from January 2024.  The reasons for this are set out in the proposition and press release. The main reason is to increase income support benefit in line with the RPI measure specifically for low income households which peaked at 8.6% in March 2023.

Social Security Minister proposes income support increases (gov.je)