‘Idea to means-test States pension is disgraceful’ - Roffey

Deputy Carl Meerveld has called for the States to consider means-testing the old age pension.

He believes western governments, including in Guernsey, will need to stop paying pensions to the better-off to prevent public spending reaching unaffordable levels as the number of pensioners spirals in future decades.

But Deputy Roffey said that was a disgraceful idea.

‘I would be dead against any means-testing of the States pension because that would represent the government of Guernsey reneging on a fundamental and long-standing compact between itself and the people of the island,’ said Deputy Roffey.

Old age pensions are paid from the Guernsey Insurance Fund, which collects social security contributions paid on earnings during a person’s working life.

‘Being an insurance scheme, it is 100% right that they should be available to all those who have paid premiums into the scheme,’ said Deputy Roffey.

‘To deny anybody their entitlement because we deem them rich enough not to need it would be just like a private insurer taking someone’s home insurance premiums for decades but then when their house burns down turning around and saying “we aren’t going to pay out anything because we think you can well afford to rebuild you house yourself”.

‘That would be a disgrace, tantamount to fraud, and so would the States taking a similar approach in relation to its own insurance scheme.’

Deputy Meerveld said that pension costs could not be excluded if Guernsey was serious about wanting to limit tax and public spending increases.

‘The current generation is paying for parents and grandparents to retire. After paying in a lot more all their working lives, there is a danger that there will be nothing left in the pot when they themselves reach retirement age,’ he said.

‘Universal pensions are not sustainable. They are not sustainable in any western nation. You’ve got to look at things like means-testing pensions. I know that’s not a popular opinion and I know how much push back there would be, but it’s a conversation we need.’

Deputy Roffey argued that there were better and fairer ways of responding to demographic changes which his committee was already putting in place.

‘Firstly, a gradual increase in the States pension age. Secondly, by a gradual increase in contribution rates. The government actuary has calculated that taken together these will render the scheme sustainable in the long term,’ he said.

‘However, those higher contribution rates will be very hard to sell to the community if today’s working population know they may be denied any benefit at all in return if they do well in life.'

Deputy Meerveld is part of a group of deputies promoting smaller government and lower levels of spending ahead of another landmark tax debate next month.

‘My parents and grandparents would never have expected to see Guernsey providing all the services and benefits it does now,’ he said.

‘If people expect this in the future they will have to pay higher taxes even than in the UK because we don’t have their efficiencies.'