A Sustainable Social Security System Malcolm Couch Chief 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  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: at phone on (direct