Short-term gain, long-term pain
A MAJORITY of States members decided last week that it would be better for all if they held back the introduction of the secondary pensions scheme.
Their short-term decision may prove popular in some quarters, especially with those businesses still recovering from the impact of Covid. But, longer-term, it could prove an expensive one for the States and for the quality of life for some OAPs, particularly if the scheme ends up significantly delayed.
The States Treasurer produced figures, referenced in debate, which revealed more than 600 pensioner households (11%) now claim income support. But if one person from each of those households had been able to put £100 aside each month through their working life, more than half of those claimants would not need income support today – saving the taxpayer some £150,000 to £200,000 a year.
Now if the secondary pensions scheme is not introduced, it will reduce the forecast £85m. deficit which the States is still pondering how to fill.
If it does eventually launch, the States would lose out on income tax from pension contributions in those first few years. But this would balance out in the long-term – 20 years plus.
That may seem like a double-win for some – but in delaying secondary pensions, ultimately those who most need it, and more widely, all taxpayers who otherwise would be paying for their support, will lose out.