In brief: Jersey’s government has been drawing hundreds of millions of pounds from the Social Security Reserve Fund to cover a reduced States Grant into the Social Security Fund, which pays pensions and benefits. A former civil servant and accountant has warned islanders are unaware of the scale of the shortfall, and that the reserve fund could run out decades sooner than planned. The Social Security Minister insists the funds remain healthy and that the reserve was always designed for exactly this purpose.
The Money Going In, and the Money Coming Out
Jersey’s Social Security Fund works, broadly, like a current account: contributions flow in from islanders, their employers, and the government via the States Grant, and payments flow out to cover pensions and benefits. Sitting alongside it is the Social Security Reserve Fund, a separate savings pot built up over many decades and intended as a long-term buffer, particularly for the pressures of an ageing population.
The States Grant into the Social Security Fund was paused entirely between 2020 and 2023, the BBC reports, due to financial pressures connected with the Covid pandemic. A reduced grant has since been reinstated, but in the 2026 to 2029 budget the government decided to hold that grant at £50 million a year. Had the full amount been paid in, it would have been between £92 million and £95 million a year. To cover the resulting shortfall, money has been drawn from the Social Security Reserve Fund.
Between 2020 and 2026, £396 million has been transferred from the Reserve Fund into the Social Security Fund. The government is now proposing a further £133 million in transfers over three years to cover the ongoing reduction in the States Grant.
Minister Says “Healthy”, Critics Say “Concerning”
Social Security Minister Senator Elaine Millar told the BBC the Social Security Fund is “actually very healthy” and was at pains to clarify that money is not being taken out of the fund, but rather less is going in. She explained that the reserve fund was established precisely to act as a buffer for periods when pensioners might outnumber working contributors, and that drawing on it now is entirely consistent with its original purpose.
Millar also pointed to the size of the Reserve Fund, which she said is “approaching 3 billion,” describing it as a substantial safety net. She offered a straightforward analogy: “If we kept the States Grant at the full amount it would be like putting money in your savings account when you can’t afford your electricity bill.” She added that even if no contributions went in at all, pensions could still be paid for seven years, and that few countries have that level of pension funding.
However, accountant and former civil servant Alisdair Macleod told the BBC the policy “concerns him a lot.” He argued that islanders are unaware of the scale of the cuts and that the Reserve Fund, built up over many decades to cushion the impact of an ageing population, is being steadily eroded. He disputed the minister’s characterisation of the fund as healthy, pointing to the last full actuarial assessment in 2021, which projected that on current levels of migration the fund would run out entirely by 2082. He added that when projections were updated to include the impact of the reduced government contribution, the fund’s life was shortened by a further ten years. “To me that doesn’t feel healthy,” he said.
A Vote Before the Review
Jersey’s Fiscal Policy Panel has warned that drawdowns and contribution cuts to the Social Security Fund should only take place after a comprehensive actuarial review of future pension liabilities. Despite this, States Members are being asked to vote on reducing the States Grant for the 2027 budget before that review has been completed.
When asked whether this was problematic, Senator Millar said she thought it was fair given the overall size of the social security funds, and reiterated that nobody needed to be worried about pensions. The minister’s reassurances may carry weight given the Reserve Fund’s considerable size, but the sequence of events, cutting first and reviewing later, is precisely what the island’s own independent fiscal watchdog advised against.
Source: BBC News
