The Committee for Employment & Social Security has submitted a Policy Letter proposing the rates of contributions and benefits funded from social insurance for 2021. This has been prepared earlier than normal in order to ensure that rates can be approved prior to the General Election, which may be held as early as October 2020.
This annual Policy Letter has, in previous years, contained propositions concerning contributions and benefits relating to the Guernsey Insurance Fund, the Guernsey Health Service Fund and the Long-term Care Insurance Fund. This year, the propositions are almost entirely related to the Guernsey Insurance Fund. Propositions concerning the Long-term Care Insurance Fund are contained in a separate Policy Letter entitled 'Supported Living and Ageing Well Strategy: Extending the Life of the Long-term Care Insurance Scheme', which the Committee has published simultaneously with this Policy Letter. Most matters concerning benefits under the Guernsey Health Service Fund have, since 1st June 2020, become the responsibility of the Committee for Health & Social Care.
A further Policy Letter on benefits funded from taxation, such as income support, severe disability benefit and carer's allowance, will be brought to the States later this year, alongside the States' Budget for 2021.
The Committee noted in its Policy Letter on contributory benefits and contribution rates for 2020 that the current contribution rates were insufficient to support the long-term sustainability of the Guernsey Insurance Fund, Long-term Care Insurance Fund and Guernsey Health Service Fund. However, with the five-yearly independent actuarial review of the Funds being undertaken during 2020, and the impact of COVID-19 not being fully known as yet, the Committee is not proposing any change to the percentage contribution rates for 2021.
Deputy Shane Langlois, Vice-President of the Committee, said:
"While the Committee feels that it's not currently the right time to increase contribution rates, increases in future are inevitable if pensions and other benefit rates are to maintain their relative value. These long-term funding issues need to be considered within the overall Review of the Taxation Strategy and the recovery from the COVID-19 crisis."
The Committee is recommending that the States pension and all other benefits financed from the Guernsey Insurance Fund be increased by 2.6% from January 2021, in line with the approved uprating policy. If the Committee's proposals are approved, the full rate of old age pension will increase in 2021 by £5.79 per week to £228.37 per week.
The Committee is recommending that upper and lower earnings and income limits for contributions are also increased by 2.6% from January 2021.