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A Sustainable Social Security System
Malcolm CouchChief Financial Officer
ICSA Seminar 20 May 2014
Key Current Government Policies
Protect the vulnerable
Grow the economy
Balance the budget by 2015/16
… and have a sustainable budget thereafter
The National Insurance Fund
Balance at 31 March 2013 was £646 million
The value of the fund was over four times annual benefit expenditure
However, expenditure for 2012/13 exceeded contributions income by £14 million
The National Insurance Fund (2)
The Government Actuary’s Department, in its five-year review to 2012, projects that the fund will be exhausted by 2054-55
Once the fund has gone, we could have a gap between National Insurance contributions and related benefits of £384 million per year
Proportion of the Community in Retirement
The number of people aged over 65 is expected to increase by 93% over the next 30 years
During the same period, the total population is expected to grow by only 20%
Put another way, the number of state retirement pensioners is increasing by 300 per year
Benefits and the Elderly
The elderly receive 68% of total benefit expenditure
State retirement pension – 47% of total
Pension supplement – 13% of total
Workers : Retired People
The pensioner support ratio was 3.6 in 2011
The support ratio is expected to fall to 1.9 by 2041
Sustainability Factors
Inflation adjusted expenditure on social security benefits has grown by 46% over the past 12 years
In cash terms up from £109 to £249 million
In the same period the population went up by 11%, from 77,000 to 85,000
Sustainability Factors (2)
The National Insurance Fund is projected to be exhausted by 2054/55
This date has deteriorated by five years since the 2007 GAD Report
Sustainability Factors (3)
In 10 years out of work benefits* case in the Isle of Man went up by 77% but went down by 9% in Great Britain
We would be spending £17 million less per year if we matched the Great Britain experience
* Incapacity Benefit/Employment Support Allowance, Income Support and Jobseeker’s Allowance
Strategic Factors
The reciprocal agreement with the UK
Raising the state retirement age
The triple-lock guarantee
The single-tier pension
Strategic Factors (2)
Defining vulnerability
Means and needs
Winners and losers
Questions?
Contact
Malcolm Couch can be contacted via:
e-mail at [email protected]
phone on 685653 (direct line)
