THE Social Security Fund has “maintained itself in real value” over the past four years despite inflationary pressures, a senior Treasury official has said amid concerns over the long-term implications of plans to reduce the amount paid into it.
The matter was discussed by the Health and Social Security Scrutiny Panel during a hearing with Social Security Minister Lyndsay Feltham about the government’s proposed 2026 to 2029 Budget.
The document includes plans for a “temporary rebasing” of the States grant to the Social Security Fund over the next four years.
If the spending plans are approved, the figure would drop from its formula value of around £97 million to around £50 million, with further “one-off” reductions of £17.6 million and £10 million – to support the government’s capital programme and living wage transition plans respectively – taking it down to £22.768 million in 2026.
Chief Minister Lyndon Farnham has previously sought to reassure States Members that the reserve fund is in a “strong state”, having grown to around £2.5 billion.
During yesterday’s hearing, panel member Deputy Jonathan Renouf questioned what impact inflation has had on the fund’s previously-referenced growth figure of £450 million over the last three years.
Andy Hacquoil, group director of strategic finance for the Treasury Department, said: “My recollection is that the fund has close to maintained itself in real value over that period.
“It’s grown in nominal terms. It has got bigger. And I think it’s useful to remind ourselves that during that period, we’ve seen particularly high inflation.”
He added: “When talking about a fund which works in actuarial time periods, short periods where inflation is particularly high, if you can still achieve investment returns which keep up with inflation – that’s quite good.”
Mr Hacquoil also noted that, while the fund had “more or less stood still” in real terms, that four-year period had also included “some of the impacts of Covid”, referencing the temporary suspension of the grant that was implemented to help the government’s pandemic response.
