Monday, 17 October 2011

Pensions - Who Will Vote Which Way

Senator Breckon's Proposition on pensions is timetabled to go through in a sitting of the old States of Jersey.

THE STATES are asked to decide whether they are of opinion -

(a) to agree that future annual increases in the old age pension should no longer be linked automatically to the Average Earnings Index but should be increased in line with whichever is the highest for the year
in question of -
(i) the Average Earnings Index;
(ii) the RPI Pensioners' Index produced by the Statistics Unit; or
(iii) a figure of 2.5%; and

(b) to request the Minister for Social Security to bring forward for approval the necessary amendments to legislation to give effect to the proposal, at the earliest opportunity.

He notes that: "The cost of life's necessary basic needs, like food, utilities, light and heating, have increased significantly over the last few years, hitting pensioners particularly hard - when REAL costs have risen, but pensions have not matched this, leaving many to suffer in silence and make do.", and also comments that "It has been demonstrated to me that some pension increases are being offset by REDUCTIONS in Income Support for pensioners, and they can actually finish up worse off after 'the increase' in pension."

As voters may be aware, there is now a 28 day gap (increased in September from 14 days by the current States voting for "extra time") from the election date this Wednesday, and the new States sitting for the first time. During that period, the old States will be sitting and voting on matters such as the budget, and the proposition below.

I think it only right that the electorate should have some idea of how sitting States members, who are seeking re-election, will be voting on this proposition. After all, you may be voting in someone who would not vote the way you would like, and that may effect how you vote.

I have, therefore, emailed all States members seeking re-election to see how they would vote, but the number of replies have, by and large, been derisory.

Voting POUR (in favour of the proposition):

Deputy Bob Hill

I will be voting POUR

Deputy Debbie de Sousa

"It goes without saying that I will fully support Senators Breckon's pensions proposition. I did meet with Mr. Hall and start work on this but due to standing for re-election did not want to open myself to the usual statement that I would do this purely to get re-elected. Sad but true this would have been the perception. I even went so far as to refrain from speaking in the final sitting of the states so that it could not be said that I was electioneering. This is so important an issue it needed some one like Alan Breckon who was not up for election."

Tracey Valois

I will be voting POUR

Senator Francis Le Gresley

I was considering bringing this proposition myself but as I was up for re-election felt that it was better for Alan Breckon to take the lead. I will be supporting it and have no problem with my response being made public.

Deputy Paul Le Claire

As with most proposals of Alan's which make good sense I will be supporting him and voting POUR

Deputy Geoff Southern

I shall be fully behind the motion.

Deputy Jackie Hilton

I will be supporting the proposition.

Deputy Roy Le Hérissier

While I await Alan Breckon's detailed arguments, particularly his broader proposals for economic growth, I will probably vote for (2) if he is prepared to separate them out. I have to say that I have great difficulty with the old house voting on proposals like this in the midst of an election.

Grey area votes

Constable Mike Jackson

The difficulty here is that we don't yet know what the consequences will be in terms of cost and  would rather have some certainty in the that direction before confirming support. Notwithstanding that I am erring towards 'Pour' at present."

Deputy Sean Power

I have not read a report and proposition in two weeks nor have I seen any comments by COM.  The answer is neither Pour, Contre or Abstain because I simply have not studied the R&P.  I always do. What worries me far more than what I have read of this R&P is our economic wellbeing and I have to say that those on COM and aspiring to be on COM have not painted a very clear picture of a vision for Jersey and how they would go about economic stability.

I had no reply from the other candidates, although (from receipts), I know that Kevin Lewis, Peter Hanning, and Rob Duhamel all read the question. However, Anne Dupre sent me this:

Thank you for your emails.  As I am sure you know, most of us a extremely busy with canvassing etc at this time. I have not looked into any future States business, as I just have not got the time at present. I will read all the proposals that will be put forward, and, of course, read the comments made by the Minister for Social Security and the Treasury Minister when this proposition comes to the States to be discussed.

Which is amazing, because the Minister most effected by the change, Deputy Ian Gorst, did have time to make a very measured reply, which I am publishing in full below:

I held a meeting with Senator Breckon some weeks ago about this issue and informed him of my position and what action I had taken and intended to take. My position is that I am 'in principle' in favour of the change. I have already instructed the Actuary to look at the cost implications. I have then committed to place that information together with the latest Actuarial Valuation before the States for any decision. I therefore believe that this decision should not be taken until these two pieces of necessary information are known. I attach below an extract from a press release about the subject that I issued in August.

Deputy Gorst announced a review of the mechanism for uprating pensions:

"The UK Government Actuary is currently completing a three year review of the Jersey Social Security Fund.  The results of this review will be used to plan future changes to the Social Security Scheme.  As we know, the number of pensioners is increasing and people are living longer.  The States has already agreed to increase the pension age from 2020 onwards, but we will also need to increase contribution rates over the next few years to ensure that pensions can continue to be paid in the future.

I have asked the Government Actuary to include in his review an analysis of the impact of changing the method used to increase pensions from year to year.  At present, pensions are increased automatically in line with the increase in the earnings index so that pensioners' incomes  rise at the same rate as the incomes of the working population.  This method was introduced in 1990 and has ensured that current pension rates have kept pace with the general level of wages in the island.

Since the earnings index began in 1990, the growth in earnings has been higher than the RPI (Retail Prices Index) in most years.  In only six years has the increase in RPI been higher than the increase in earnings.   As a result, the Jersey pension rate of £184.45 a week compares very favourably with the UK pension of £102.15.

In recent years, the RPI has been higher than the earnings index in 2008, 2010 and 2011.  The review by the Government Actuary will calculate the cost of changing the method of uprating, so that it takes into account both the cost of living and the earnings index.    In the UK this has been referred to as a "triple lock" and the UK government has committed to uprating the basic state pension by a triple guarantee of the highest of the increase in earnings, prices (CPI) or 2.5%.

The cost of changing the method of uprating will need to be borne by the current working age population.  Any decision will need to take into account the increase in the contribution rate that is needed to maintain the current system, as well as the extra cost of a more generous uprating method.

I intend to publish a report setting out this analysis at the end of October.  Following the elections, the new Minister for Social Security will be able to put proposals to the new States Assembly."

Senator Breckon's Proposition

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