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Moves to limit parents' social security credits

Moves to limit parents' social security credits

Wednesday 13 September 2023

Moves to limit parents' social security credits

Wednesday 13 September 2023


Parents who are not working full-time could see their family allowance benefits limited as Employment & Social Security tries to encourage more people into work while making the contribution system fairer.

As an “initial step”, the Committee will ask the States next month for family allowance credits which are awarded for a household’s youngest child to be set at 12-years-old from 2025, down from the current top-limit of 16.

The credits, awarded to parents who are exempt from paying non-employed social security contributions, support their death grant, survivor’s benefit, and States pension.

ESS also proposes a protection scheme for parents who would be affected, including home schoolers and those who care for children with additional needs, and those who meet the criteria and can prove payments up to the age of 16 would be fair and equitable.

The Committee said it “does not consider it just or equitable, except in limited circumstances, for the pension entitlement of parents of children attending secondary school to be subsidised by those islanders who are economically active”.

Furthermore, it sees it as supporting “the objective of maximising workforce participation”.

ESS added the change, if approved by deputies, would represent a “small net gain” for the Guernsey Insurance Fund.

General family allowance is available to all parents with a household income below £120,000 for any child younger than 18 who is in full-time education. 

Historically, more than half of people awarded the separate family allowance credits received them for less than a full year, with the majority going to households where the youngest child is under five in 2018.

Committee for Employment & Social Security

Pictured: Employment & Social Security will seek States approval on the idea next month, alongside it's annual uplift in contribution and benefit rates.

In a letter to ESS, Education President Deputy Andrea Dudley-Owen said “the Committee can see the merits of withdrawing FAM credits once the youngest child of the recipient has reached 12 years of age as a possible way to incentivise greater workforce participation, and recognises the consistency between this proposal and the guidelines for the minimum work requirement.

Education requested a continuation of the allowance for home schooled children until the age of 16, saying it doubted this would spur more parents to home school children to continue receiving the credits.

It also called for protections on those with care responsibilities as these “undoubtedly place an increased pressure on families who might already be facing an exceptional number of challenges”.

These were recongised and included by ESS.

Deputy Dudley-Owen also said Education were also concerned that those who only work in term-time, or take unpaid leave in the school holidays, would be negatively impacted.

It requested that credits continue for children up to the age of 16 in those circumstances, and so parents could be around to supervise young teenagers to prevent anti-social behaviour throughout States school holidays.

But ESS rejected this final suggestion: “Members are of the view that contribution credits or record protection schemes should not support workplace non-participation, except when a person’s circumstances prohibit them from engaging in employment or self-employment, or from paying a Class 3 voluntary contribution. 

“The Committee does not think the provision of contribution credits would have any bearing on a parent’s decision to work only during term-time, and, therefore, would have no positive impact on addressing antisocial behaviour.”

It added that many term-time workers are paid for the full year and therefore have no social security contribution gaps.

READ MORE...

Family allowance 'honesty policy' to be introduced

New income cap among family allowance reforms

Benefits boost for poorest families 


 

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