Under the plans, which face debate by the States Assembly, the full weekly pension would go up by core inflation of 4.3% to £304.65.
Alongside the pension increase, ESS has proposed two measures to reduce spending from the Guernsey Insurance Fund. The maximum period for which people can claim unemployment benefit would be cut from 210 days to 150, while bereavement benefit, which is paid to those who have lost a partner, would be halved from a year to six months.
The committee said the two measures, which come as all committees are being asked to cut spending, would together save £350,000 a year, and warned that further savings could follow.
Explaining the bereavement change, ESS said the allowance should support the immediate period after a death ‘rather than provide longer-term income replacement’. It said 26 weeks was considered enough to help with the initial financial adjustment, and that people facing ongoing hardship might qualify for means-tested income support.
The pension is normally uprated using a formula known as the ‘double lock, with look back’, under which it rises by either RPIX inflation or RPIX plus a third of the gap between that and the rise in median earnings – whichever is higher.
However, ESS said it had been unable to apply the formula because up-to-date median earnings data was not available, owing to problems with the rolling electronic census.
The most recent figure, for the year to 30 June 2024, showed a 5.3% rise, but the committee said it did not know when newer data would be published, leaving it ‘no choice’ but to propose a flat inflation increase.
ESS president Deputy Tina Bury has previously warned that a successful amendment to the tax package, restricting spending from both general revenue and the island’s insurance funds, could force below-inflation pension rises in future, as the number of pensions being paid continues to grow. That amendment, calling for a real-terms freeze in States spending, has yet to face a final vote, and the committee said it had played no part in its pension proposals for 2027.
The new rate is expected to take effect in January, provided the States approves it in time for the necessary preparations. Some deputies have voiced concern that this might not happen if the Assembly remains bogged down in debating amendments to the tax package.