TAX incentives could help over-50s remain in work for longer, according to a minister.
Environment Minister Jonathan Renouf – who stressed he was speaking in a personal rather than ministerial capacity – suggested tapering social security contributions ‘over a certain age’, rather than the ‘current “cliff edge” where you stop paying social-security contributions if you work past retirement age’.
Earlier this week, Economic Development Minister Kirsten Morel said that the Future Economy programme would focus on schemes improving access to lifelong learning and reducing bias against recruiting older candidates. He added that the solution to the Island’s ageing population – ‘the single most important economic challenge that we face’ – lay in increasing the productivity of the existing population.
Responding on Twitter, Deputy Renouf said the Island needed ‘to look at tax breaks plus other financial and non-financial incentives’.
He added: ‘Over-50s may want to work part time; they may be prioritising quality of life but still wanting to contribute. We have to make paid work a more attractive proposition.’
Speaking to the JEP, Deputy Renouf said there was ‘a case for considering whether there are tax measures that might incentivise people to return to work or stay in work longer’.
Deputy Renouf added: ‘In Japan they refer to the 50–70-year-old bracket as the ‘young old’, and they have developed a range of policies to keep people in this age bracket healthy and economically active. A similar focus in Jersey would help us tackle a lot of the problems of an ageing population.
‘This would enable us to better understand the reasons why people are leaving the labour market well before retirement, and shape policies accordingly.
‘It’s important to debate how we encourage people who may have left the workforce to return – not necessarily in full time employment, but perhaps part time.’
In last week’s UK budget, Chancellor Jeremy Hunt announced his intention to scrap the lifetime limit on tax-free pension savings and increase some annual allowances, as a part of his plans to make paid work more attractive for over-50s. He said financial incentives would help keep senior doctors in the NHS, while also stopping other professionals from retiring early. The UK government’s independent economic forecaster speculated that these measures would increase employment by 15,000 workers.
Treasury Minister Ian Gorst said: ‘We as an island do provide tax relief in respect of pension contributions, and this can be up to as much as £50,000 annually.
‘Jersey did not follow the UK in introducing complicated changes to pensions tax which the UK government is now reversing.’
Former Assistant Chief Minister Rowland Huelin – who had responsibility for population policy – echoed Deputy Renouf’s views on social-security payments over a certain age.
He said: ‘There has to be a combination of financial incentives and benefit statements clarifying why it is essential that over-50s are in work.
‘The government needs to make sure that work is admin-free and financially attractive. People of retirement age would need to be assured that if they are going back, they are not going to be paying social security on their income.’
He added that employers should be encouraged to allow flexible and part-time working, as well as job-sharing. ‘Employers are reluctant to allow this, but it should be normalised.’
In February, Nathan Elstub, executive chair of the impact investment committee at charity Nesta, described Jersey as having ‘one of the scariest age pyramids’ he had ever seen, after the latest census found that the ‘dependency ratio’ in Jersey had risen to 52%. This means that fewer people are of working age and paying taxes than there are non-working people.