Advice received from Social Security Fund actuaries

2025.10.21

4.1   Deputy J. Renouf of St. Brelade of the Minister for Social Security regarding advice received from the Social Security Fund actuaries in relation to the reduction in the grant to the fund (OQ.231/2025):

Further to her comments to the Health and Social Security Scrutiny Panel during the Quarterly Hearing on 24th September 2025, will the Minister provide details of the advice she has received from the Social Security Fund actuaries regarding the reduction in the grant to the Fund?

Deputy L.V. Feltham of St. Helier Central (The Minister for Social Security):

Yes, I can confirm that the letter that I received from the actuaries was published on Gov.je yesterday, and a link was sent to all States Members. In addition to the letter published yesterday, I will be providing additional information to Members in the next few weeks on the long-term impact of the proposed temporary reduction in the grant over the next 4 years.

[9:45]

1. Deputy J. Renouf :

Speaking to the Health and Social Security Panel on the same day, the Minister told the panel that the advice she received from the actuaries was the basis of her confidence that reducing the grants of the Social Security Fund was not going to damage the long-term solvency of the Fund. Can she say what part of the letter from the actuaries gave her this confidence?

Deputy L.V. Feltham :

When I looked at the tables provided by the actuaries and the impact on the Fund over time, I noted that there was very minimal impact in the next few years shown over the next 4 years. I was conscious that what we did not have within that letter was actuarial advice regarding just the temporary reduction. What the advice relates to is a more permanent reduction. That is why I have requested that additional letter. But I am confident that the proposed temporary reductions will have a minimal impact on the long-term sustainability of the Fund. I have received officer advice as well to that effect, but I have asked for that further independent advice to give Members further assurance ahead of the Budget debate.

2. Deputy A.F. Curtis of St. Clement:

Will the Minister advise whether, in requesting an update from the actuaries on the funding, any request was given to them about changing or altering the investment return that the Fund is due to produce over the time period?

Deputy L.V. Feltham :

As usual with asking for advice from actuaries, we did ask for a number of scenarios. Those scenarios included population differences as well as differences in possible returns from investments as well.

3. Deputy A.F. Curtis :

Was the base case requested by the Minister and her officers to understand the impact of the Fund with no change to the actuarial modelling proposals, A.K.A. (as known as) no change to the investment return to that that was previously used to forecast the performance of the Fund?

Deputy L.V. Feltham :

Yes, we of course always need to compare to base cases. We also asked for an adjustment on the actual figures within the Fund at the end of 2024 as well.

4. Deputy P.F.C. Ozouf of St. Saviour :

The Fund is a contributory one, as the Minister knows, set up on the basis of a third, a third, a third contributions from employees, employers and the States. The wise decisions of the Minister's predecessors puts the funds today in a very robust form. Those, however, is a separate fund for the purposes of contributory benefits and pensions and I would have thought that the first and proper decision, if surplus funds are available, are to at least consult with the receivers of benefits and the future recipients for what they wish to do with effectively what is their partnership funds of it. I wonder whether the Minister would explain in the event of this good position being on the Fund, which is to be welcomed, what alternative considerations were given to either improve benefits or relieve contributions at present?

Deputy L.V. Feltham :

I gave a lot of consideration to intergenerational fairness. As Members will see from the charts produced within the actuaries' report, the Fund is very secure for the pensioners of today. When making decisions and when providing challenge to Treasury colleagues and in discussions with Council of Ministers, I did consider intergenerational fairness. The things that we are funding in this Budget are very much about that and future receivers of pensions. Things like ensuring that our residential childcare settings are suitable and fit for purpose. Things like ensuring that our emergency services are well-funded and well-run. And things like ensuring that our teachers have good terms and conditions ongoing. We need to remember as well that additional funding in the Budget is provided for childcare. We need to ensure that the Social Security Fund is fit for purpose for the future. The only way that we can do that is ensuring that we have a working population into the future as well.

5. Deputy P.F.C. Ozouf :

The Minister explained a number of very valid matters, which are in the past and in the historic situation of the Fund, are matters which have been dealt with out of general taxation. My question related to the options of the Fund recipients themselves. She is talking about the ecosystem of which the Fund operates, but the Fund is a contributory fund and has not been interfered with like other funds, which is a matter of great celebration in Jersey. She talks about the intergenerational funds in the future but what about the contributors now? I recall, for example, the mini-Budget that was introduced in the first time of this Government, approved by this Assembly, that relieved employees of their obligation to place money into the Fund. There is a cost-of-living crisis and is it not appropriate to at least publish, and would she agree to publish, what options she had in relation to what to do with the surplus fund? For example, was consideration given to relieving the current contributors paying into the Fund without any problem of compromising future pensions and their future pensions? Was consideration like that given, that is what I am asking?

Deputy L.V. Feltham :

The measure in the current Budget is a short-term measure. Yes, we did, of course, consider the current contributors to the Fund, which is the working-age population of the Island. What we know is that one great burden on the cost of living for our working-age population is things like paying for childcare. That is why we have provided very targeted measures within this Budget. Of course we do have an election coming up. I stood on a manifesto that had very clear policies in relation to contributions and taxation, and I think that that will be an election matter in the coming year.

Deputy P.F.C. Ozouf :

I asked whether the Minister would publish her alternative options. The Deputy Bailiff :

Yes, did you respond to that part of the question?

Deputy L.V. Feltham :

We looked at what was available with the contributions that we have and what we would be putting in. We did not consider any other alternatives in relation to cutting contributions. That would have been inappropriate and would have had a far more longer-term reach and impact on the Fund.

6. Deputy H.L. Jeune of St. John , St. Lawrence and Trinity :

Coming back to the Minister's answer of Deputy Curtis , the predictions undertaken by the actuary that are outlined in the letter are based on an instruction from the Government to increase the expected rate of return on investments by 1 per cent. What advice did the Minister receive on this changed assumption about investment returns and on what basis did the Minister issue this instruction?

Deputy L.V. Feltham :

We know that the investments have outperformed expectations for several years, so it is on the basis of prior returns to the Fund and advice of our investment experts as well in Treasury.

7. Deputy H.L. Jeune :

Did the Minister consider what assumptions other pension funds are making at the moment about expected rate of returns over the next few years, and why did she not ask the actuaries for their advice on what future return to set rather than from the past?

Deputy L.V. Feltham :

I would anticipate that that kind of information would be part of the advice that we will receive from actuaries in the next year. In addition to the planned actuarial review, I will also be commissioning the actuaries to undertake further work so that we can ensure that our Social Security Fund remains fit for purpose and does what it needs to do for future generations of the Island without putting too much burden on the taxpayer.

8. Deputy L.M.C. Doublet of St. Saviour :

Could the Minister explain to the Assembly if the predicted 1 per cent is not realised what are the impacts of that? What happens to the Fund?

Deputy L.V. Feltham :

Of course, pension funds are very long-term investments and I am sure that we all know from our own pension funds that when you are planning over a long-term investment, then you plan over the longer term returns on the fund. It may well be that in some years the investment returns are not as high as other years, but over the long-term investment period that does balance out.

9. Deputy L.M.C. Doublet :

The Minister mentioned that she is seeking further advice from the actuaries. Could she commit to sharing that advice as it is given with the relevant Scrutiny Panels and, if appropriate, with the Assembly, please?

Deputy L.V. Feltham :

I would hope that my Scrutiny chair does know that I share advice with them on a free basis, and confidential when I have to. I think that Scrutiny and the role of this Assembly in decision- making is incredibly important. I took a lot of convincing that this was the right thing to do. I expect the right level of scrutiny from this Chamber and I, of course, will provide them with the information that they need to make their own decision when we come to the Budget debate.

10. Deputy J. Renouf :

I am grateful to the Minister and Government for publishing that letter, but the letter makes clear that the only reason that the fund looks in rude health is because the Government has instructed the actuaries to consider the matter only with a 1 per cent increase in investment returns. Had they not put that assumption in, the investment returns would have looked very much worse. The actuaries suggested at point 15 in their letter that the wisdom of the Government's instruction to increase the rate could be assessed by the actuaries if the Government wished. Has the Minister taken up this offer and if not, why not?

Deputy L.V. Feltham :

At the moment that has not been taken up but, of course, as I said in my previous answer, we will be asking the actuaries to undertake their planned review and also be asking for that additional piece of work to do to give the public of Jersey and this Assembly the confidence that we are taking the right steps into the future.