Pensions news need not worry today's OAPs
TODAY'S pensioners should not be worried by what they may have read in the Press over the last few days about pension increases. I have consistently given assurances, with the full backing of the board, that the Social Security Department will recommend that pensions are increased by at least RPIX each year. That's what many pensioners would call 'cost of living'. A cost of living increase for next year's pensions would be 1.5%. We're recommending 1.7%.
For many years, Social Security has tried to increase pensions by more than cost of living. And that's still the intention. The point of debate is by how much more than cost of living.
Historically, the aim has been to increase pensions at the half-waypoint of the difference between the cost of living and the increase in average earnings. Social Security and the Treasury and Resources Department proposed to the States earlier this year that pensions should in future be increased by one third of the difference. We also proposed that, further down the line, and by which stage we would expect an additional (secondary) pension scheme to have been established, the basic old age pension should then increase each year by cost of living, but no more than that.
So these are medium and long-term issues, to be decided by the States in the context of the Personal Tax and Benefits Resolutions. But these are not issues that should be causing worry to today's pensioners, less still the older pensioners. The issues are far more relevant to the pensioners of tomorrow, which is why we are currently out to consultation on a secondary pension system for Guernsey in order to assist people to increase their personal pension provision.
It should be noted that between 2005 and 2014, the rate of old age pension increased by 42% whereas median (average) earnings increased by 34%. This showed that pension increases were beating the policy objective of the mid-point of prices and earnings. The pension increases for 2013 and 2014 were 2.1% for each year, which in both cases matched the increase in prices (RPIX).
As regards free TV licences for people over 75, I wish to make it clear that anyone who has been receiving a free TV licence will continue to do so. The proposal to stop this benefit applies only to people who become 75 from next year onwards.
On winter fuel allowances for householders on supplementary benefit, Social Security uses the prices index relating to fuel and lighting. The proposed reduction of £2.34 per week in this winter's fuel allowance, from £30 to £27.66, is in recognition of a 7.8% decrease in the cost of fuel in the year to June 2015.
Just as people expect a benefit to rise with a relevant index, they should expect it to fall when the index does the same.
I hope this reassures pensioners and others receiving States benefits that our department continues to act in their interests.
ALLISTER LANGLOIS,
Social Security minister.
