Social Security Legislation: Pension Age Increase: Law Drafting Instructions

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A decision made 14 December 2012:

Decision Reference: MD-S-2012-0110
Decision Summary Title :	DS – Law changes required following States agreement to change the pension age – Law drafting instructions		Date of Decision Summary:	14 December 2012
Decision Summary Author:	Policy Principal		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	WR – Changes to pension age: required amendments to Laws – Law drafting instructions		Date of Written Report:	14 December 2012
Written Report Author:	Policy Principal		Written Report : Public or Exempt?	Public
Subject: Law drafting instructions to amend Laws to reflect the changes to pension age agreed by the States in June 2011.
Decision(s): The Minister decided to instruct the Law Draftsman’s Office to undertake changes to laws affected by the decision to raise the State Pension Age, as set out in the attached report.
Reason(s) for Decision: In June 2011, the States approved a Proposition (P58/2011) to increase the age at which an individual is eligible for a Social Security pension (Old Age Pension). Changes to the pension age commence in 2020, with the pension age increasing from 65 to 67 by 2031.
Resource Implications: There are no financial or manpower implications.
Action required: Policy Principal to submit instructions to the Law Draftsman’s Office.
Signature:		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Social Security Legislation: Pension Age Increase: Law Drafting Instructions

Changes to pension age – required amendments to Laws

Proposed law drafting instructions

In June 2011, the States approved proposals from the Social Security Minister to increase the State Pension Age – the age at which people can receive their Jersey Social Security Old Age Pension. As a result, the pension age (for both men and women) will increase from 65 to 67 by 2031. This will be achieved by increasing the pension age by two months a year from 1 January 2020. These changes need to be reflected in any Law that refers to pension age.

A number of Laws refer to the phrase ‘pensionable age’. Under the changes, as the pension age increases in stages people will have different pension ages until the pension age eventually reaches 67 in 2031. So as long as the meaning of ‘pensionable age’ is taken as that applying to each particular individual (and which, as the changes take effect, will be different), then no changes would be required to such general wording, only the definition which would link to a schedule. It should be noted that ‘pensionable age’ means the state pension age, which is not necessarily the age at which people take their pension – that can be up to two years before their pensionable age.

In some Laws, an age is given in the wording of a paragraph itself – generally 65. In these cases, the words ‘pensionable age’ could be used so long as it meets the original definition as amended (see A below) and therefore overrides the fact that until the end of 2019 some women retain a pensionable age of 60. If we want to include such women, they would have to be particularly highlighted – as in Article 7, paragraph 2 of the Social Security (Contributions) (Jersey) Order 1975.

The Laws and the particular articles/paragraphs affected are as follows:

Social Security (Jersey) Law 1974

Under Article 1 ‘Interpretation’, the definition that says ‘pensionable age means the age of 65’ needs to change. It has to reflect the fact that that when the changes commence in 2020, the pension age will increase by two months every year, until reaching 67 in 2031. So according to when they were born, people will have different pension ages. It is important that pensionable age is not interpreted as meaning the age at which someone takes their pension – so a man who took his pension at 63 now, for example, would still have a pensionable age of 65.

I suggest the best way of dealing with this (and for the changes referred to below) is to refer to a schedule that contains a table of dates of birth and ages and the effect of the changes – see later.

The Social Security (Amendment of Law No.2) (Jersey) Regulations 2012 came into effect on 28 February 2012. This made a number of amendments to the Social security (Jersey) Law 1974. Under the new Article 8A, there is reference in paragraph 6 to ’divided by 45’. This needs to be changed to reflect the rise in pension age. We are retaining the number of years required for a full pension as whole numbers – in other words as the pension age moves to, say, 65 years and two months, we are not moving the life average contribution factor to 45 years and two months. It would remain at 45. The number of required contribution years will only change when the pension age moves to 66, when the contribution years will move to 46. And when the pension age is 67, the number of years’ contributions will rise to 47. So the ‘divided by’ figure would be 45, 46 or 47, depending on an individual’s pensionable age.
Paragraph 7 under Article 8A also requires revision. The words ‘not exceeding 45 years’ need to reflect the fact that once the changes take effect, this will move up to 46 and then 47 years.
Under Article 25, Old age pensions, Clause 1A a) referring to a reduced pension says: ‘the person is over the age of 63’. Currently this relates to two years earlier than the current pension age of 65.

This needs to change to reflect that if an individual’s pension age increases so does the point at which they may take their pension early. Once again we are sticking to whole numbers. So someone with a pension age of 65 years and two months will still be entitled to a reduced old age pension at 63 years. But for someone who has a pensionable age of 66, they will be able to get a reduced pension at 64; someone who has a pensionable age of 67 will be able to have a reduced pension at 65. Again, reference could be made to the schedule to show when people would be eligible for a reduced pension.

Article 47 Persons over age 60. The heading and 47(1) needs to change to reflect the fact that the driver remains five years below pension age, so as the pension age increases in whole numbers, the 60 moves to 61 and then 62 as the pension age moves to 66 and 67. Again, reference can be made to the schedule.

The Social Security (Contributions) (Jersey) Order 1975

Article 16 ‘Persons over age 60’

The heading and reference in 16 (1) to ‘age 60 years’ needs to be amended along the lines set out for Article 47 set out above.

The Social Security (Incapacity Benefits) (Jersey ) Order 2004

Under Article 8 ‘Entitlement to lump sum’ section 4a, the reference to ‘not yet 65’ needs changing so as to reflect the move to 66 and 67 when it happens.

Cold Weather Bonus (Jersey) Regulations 2012

Under Article 3 ‘Qualifying conditions’, paragraph 4 says ‘at least one adult in the household is aged 65 years or over and is receiving a Jersey old-age pension’. This needs to be changed to ‘of pensionable age’. {So long as the earlier definition is accepted]

Health Insurance (Jersey) Law 1967

Under Article 1 Interpretation, it states that ‘‘compulsory insurance age’’ means the age of 65’. This will need to be amended to ‘pensionable age’ to reflect the changing pension age as set out in the Schedule.

Income Support (Jersey) Law 2007

Under Article 3 Persons eligible despite not being engaged in full time remunerative work, paragraph 1 a) refers to ‘persons aged 65 years or over’. This needs to change to ‘of pensionable age’.

Suggested schedule

This is the suggested linked schedule to be used to define pensionable age

Date of birth	Pensionable age	Years of contribution required to qualify for a standard rate old age pension	Age at which reduced old age pension under Article 25 (1A) can be claimed	Age at which persons can elect under Article 47 to be excepted from paying contributions
1 Jan 1955 to 31 Oct 1955	65 years and 2 months	45	63	60
1 Nov 1955 to 31 Aug 1956	65 years and 4 months	45	63	60
1 Sep 1956 to 30 June 1957	65 years and 6 months	45	63	60
1 July 1957 to 30 April 1958	65 years and 8 months	45	63	60
1 May 1958 to 28 Feb 1959	65 years and 10 months	45	63	60
1 Mar 1959 to 31 Dec 1959	66 years	46	64	61
1 Jan 1960 to 31 Oct 1960	66 years and 2 months	46	64	61
1 Nov 1960 to 31 Aug 1961	66 years and 4 months	46	64	61
1 Sep 1961 to 30 June 1962	66 years and 6 months	46	64	61
1 July 1962 to 30 April 1963	66 years and 8 months	46	64	61
1 May 1963 to 29 Feb 1964	66 years and 10 months	46	64	61
1 March 1964 onwards	67 years	47	65	62