Government
Reinstate the full grant to the Social Security Fund and secure the strenght of our other funds
We must not use long term funds such as the Social Security Reserve Fund a Strategic Reserve to fund daily pressures. Cuts and withdrawals from these need to be reinstated.
I believe that Jersey should financially plan and prepare for the future. This means saving now and investing in our long term funds to be a stronger more resilient island. We promote saving in our private lives but then seem not to follow this in Government.
We must also not use these funds to cover shortfalls in today’s spending, or extend our spending appetite beyond our means.
The Social Security Funds
Our Social Security funds secure the ability to pay pensions and certain benefits in to the future. The Social Security Fund maintains day-to-day income and expenditure, with the Social Security Reserve Fund preparing for the future.
The funds are reviewed for the sustainability, both in Government and by UK Actuaries. At the last full review in 2023, the Reserve Fund was predicted to be exhausted in around 2081. Whilst the mood of some is that this is a good position, once the Reserve Fund runs out, all outgoing Social Security costs will need to be bourne by incomings, or other funds.
This is why moves to reduce the funding of these is a short-sighted move. In both 2024 and 2025, the Government Budgets’ reduced payments in to the funds from tax revenue, to fund day-to-day expenditure, including ‘desirable’ new spends.
In some years, this reduction is almost £100 million, with £50 million of reductions in 2027 - 2029.
The result is not good for our long term fund balance. The UK Actuaries have confirmed this reduction will mean the Reserve Fund is forecast to be exhausted 10 years sooner, now in 2072. (Link to UK Publication)
What’s worse? The £50 million is now committed spend and there is no identified source of funding beyond 2029.
We must reinstate the full States Grant to the Social Security Fund.
The Strategic Reserve Fund
The Fiscal Policy Panel consistently reports we should maintain a Strategic Reserve at around 60% of our GDP, yet in recent years we have only drawn money out of the fund, for example for the Hospital at Overdale.
I accept that it is unlikely we will have a meaningful path to 60% of GDP, however that does not mean we should not try to fund add to this fund.
Recent States debates have leant on the fund as a ’last resort’ if the books can’t be balanced. We must be more diligent in securing our funding.