Tax rises needed by 2017 to pay for Jersey pensions

Tax rises are needed to help Jersey pay for its ageing population, Social Security Minister Francis Le Gresley has warned.

Senator Le Gresley said the States' £1bn welfare fund was in a good position but welfare spending would soon outstrip contributions.

Contributions, currently 10.5% of salaries and shared by workers and employers, may have to rise from 2016.

Jersey spends three quarters of its welfare budget on pensions.

"We pay out roughly every year another 500 pensions on top of the current figure so we need to make provision for that extra expenditure," said Senator Le Gresley.

"We need to start thinking about how we increase contributions. We're probably looking at 2016 to 2017."

The 2011 Jersey census showed about 18% of the island's population was over the age of 65. The population of the island was nearly 98,000 with about 17,000 people aged 65 or older.

Senator Le Gresley's comments were made as the States unveiled the latest three-yearly review of the social security fund conducted by the UK Government Actuary's Department, which assesses public sector financial risk.

The report suggests social security contributions may need to rise by up to 40% by 2042. It also suggests more immigration could limit the need to raise tax by increasing the number of taxpayers.

Senator Le Gresley said some of the £1bn fund, worth five times current annual welfare spending, could be used to smooth tax rises.

Separately, Jersey is introducing a 0.5% income tax in 2015, rising to 1% in 2016, to fund long-term care for the elderly.