State pension reform report gets Tynwald backing

The full state pension on the Isle of Man is currently £241.50 per week

A report which considers options to preserve the Isle of Man's National Insurance Fund for the "pensioners of today and tomorrow" has been backed by Tynwald.

The document outlined four options for reforming the policy in a bid to sustain the fund, which projections suggest could run out by 2047-48.

Treasury Minister Alex Allinson said the proposals, which include options to replace the "triple lock" state pension, were about "stablising" the fund not "cutting pensions".

An amendment by Lawrie Hooper MHK to maintain the fund at a minimum of twice its annual expenditure was not supported by members.

The £1.07bn fund is topped up annually with money left over after contributions from workers have been used to pay for the majority of benefits and state pensions.

However, an actuarial report in 2022 forecasted that the surplus would reduce and the fund would be exhausted by 2047-48, partly due to people claiming state pensions for longer.

During the November sitting of the Isle of Man's parliament, some MHKs suggested any changes should lead to a "credible" pension figure and called for the "financial realities for pensioners" to be considered.

Proposing his amendment, Hooper also suggested the island should be "bold enough" to use some of the fund to invest into island infrastructure, such as social housing.

But other MHKs suggested "putting all of our eggs in one basket" or investing it in the Manx economy instead of low risk bonds off-island, could prove to be "too risky".

'Social contract'

In the two-hour debate, Allinson told members there were "no plans to raid the funds" in the proposals or spend part of them.

But he said there were clear but "difficult" choices to be made, either to "increase contributions or reduce further projections of pension costs".

The minister said the scheme operated on the "basis of a social contract between generations... it is the sons and daughters who are currently paying for the pensions of their parents and grandparents".

He said a balance needed to be struck to "ensure a degree of intergenerational fairness" and protect the pot for the "pensioners of today and tomorrow".

The triple lock method, based on a formula that increases pensions annually by the highest of three options, namely 2.5%, CPI inflation, or average wages increases, was "recognised to be unsustainable without a significant increase in fund income", he added.

While the document was approved by the majority of Tynwald members, three MHKs voted against it.

A further report, which will consider members' perspectives, is expected prior to next year’s budget.