Pension fund’s £5m. has to come from somewhere
Monday 3rd August 2009, 1:00PM BST.
EMPLOYERS could be faced with a large rise in social security contributions in the future as a result of the States rejecting a smaller increase scheduled for next year, department minister Mark Dorey has warned.
Deputies voted on Friday for the pension age to rise to 67. The move was part of a package of proposals from Social Security aimed at ensuring its pension fund remained healthy.
But the assembly rejected a key element of the package – to increase the contribution rate for employers by 0.5% – and Deputy Dorey said he was disappointed.
He said the department would have to come back to the States with another proposal to make up the £5m. a year that would have been generated by the increase.
‘Fundamentally, it was a total package and now we only have part of it,’ he said.
‘It means we have not fully solved the pension puzzle. We will have to come back at some point because the 0.5% increase for employers did not go through.’
Deputy Dorey said he did not know at this stage when that would happen.
‘By law, we have to do a five-year actuarial review of our fund anyway, so when that report next comes out it will presumably expose the current situation and maybe the States will be able to consider it at that time,’ he said.
He said employers’ contributions would have to rise at some point and the department, with its recent proposals, had tried to introduce a softer approach to increases.
‘Obviously, the earlier we do it, the less we have to do it, and that is what we were trying to do,’ he said.
‘We wanted to make these changes now and not have to bring in larger changes later. But I hope the States will agree to make up that money at some point not too far in the future so it’s not too large a change at a later date.’
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Why are employers always targeted for more social security contributions. I know it didn’t go through this time and just as well as we couldn’t absorb the increase because costs/labour would have had to rise so in the end the ordinary Guernsey taxpayer would foot the bill. People have only a limited amout of money and everything is so expensive over here you wonder if it will drive more people into the poverty trap. Employers unite I say.
I don’t care what they say it is totally different in the UK, employers contributions are highter but small businessess get a lot of help and government grants etc unlike here where employers get nothing. I know because my brother runs a medium sized company in the Uk. I wonder if Deputy Dorey runs a company, I bet he doesn’t so he probably wouldn’t have a clue how people in business keep their head above water in this climate.
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Teresa – employers are regarded by the states as the beneficiaries of 0-10, and therefore fair game, despite most local employers getting almost no benefit. I was thus surprised that the increase was not passed along with the rest of the GSSA “package”.
I was hoping that the T+R suggested delay, pending full review of the GSSA / Income Tax inter-relationship would have been more widely supported, as some of the anomalies following the increases in GSSA coupled with the introduction of the 0-10 “regime” are becoming ridiculous. Marginal overall rate of 31% for some, but zero for many others with means.
I don’t think Deputy Dorey does anything much – leastways, not much that attracts a GSSA contribution – lives off rents and dividends probably (old money too, I think), whilst only having to pay GSSA on his deputy’s salary.
Similarly, I do not think many states members will be missing out on many month’s worth of the OAP as the age rises to 67 – most of them are well over fifty.
Dorey argued against a removal of the various caps (Rhoderick Matthews proposal)so as not to upset the wealthy – because apparently thirty percent is too high – or pensioners with high incomes. Yet self employed people on moderate and middle incomes are paying thirty percent on income (and extra TRP on business premises) in return for less and less.
There are various bodies that are supposed to support employers and business (laughs hysterically) such as Chamber, CGI, etc. – but they are all run by pretty much the same people and nearly all aren’t really interested in small local businesses, except for their membership fees and the pretence of having their political support.
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We need more social security contributions because the pension pot needs topping up. Well the answer is obvious to all but those in the States. If they were to revise the welfare system completely and ensure that only those with a genuine need were to receive benefits then problem solved.
There are fare too many people who seem to be able to choose not to work and the States keep letting them get away with it whilst being laughed at in the process.
Only last week there was yet another benefit cheat, £3,500 I think it was, who has to do 90 hours community service. Poor thing, she knew what she was doing but just gets a tap on the knuckles and a “don’t do it again, there’s a good girl”.
Far too many people are taking out of the pot without putting in and it’s high time they were made to work and contribute like the rest of us. The States must make benefits less attractive so come on – what are you scared of?
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I still say that a new +10% is the answer; or at least an increase of what they now pay, they wouldn’t miss it; but older people would find it a God’s send.
They live in the Island enjoy a good life, yet their poorer fellow citizens find it hard to make ends meet.
The working man has never had it fair; and still the ruling body does nothing.
They should stand up and give thanks to the, the pensioners for making the Island what it is today. No wonder people vote socialism, the ruling body forces it upon them.
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