Jersey: New employee social security contribution to pay for long-term careThursday, November 18th, 2010
Earlier in 2010, the Social Security Department consulted interested parties on proposals in a Green Paper for the funding of long-term care for the elderly. A consultation White Paper has now been published to seek views on the Department’s preferred approach. A similar funding arrangement already operates in Guernsey.
In brief, the proposal is to introduce a new long-term care benefit which will be paid from a ring-fenced fund that will be financed from contributions from employees, the self-employed and retired people, in addition to existing state funding. Alternative funding methods had been considered and there was a preference for a new compulsory social security contribution. The actual provision of care, when the scheme is in place, will be financed partly by the fund and partly by co-payments from the beneficiary.
A number of the issues raised in the consultation document are not directly within the scope of this newsletter, such as the means testing rules. The mandatory employee contributions, however, will be a payroll process and will involve an additional contribution of 1.5% of earnings, without any ceiling, separate to the existing social insurance scheme. There will not be any employer contributions as the provision of care in retirement is not considered to be a matter related to employment.
The closing date for comments on the proposals is 7 January 2011. The current timetable shows the scheme being introduced from January 2013.