A Sustainable Social Security System Malcolm Couch Chief Financial Officer ICSA Seminar 20 May 2014.

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)