April's planned rise in Isle of Man state pensions will cost £14m

The 8.5% rise in pensions will be included in February's Isle of Man Budget for 2024-25

Mirroring the UK's 8.5% rise in state pensions on the Isle of Man will cost £14m, the treasury minister has said.

Alex Allinson said the increase was "absolutely the right thing to do" after previously committing to follow the UK on the triple lock principle.

However, he said UK changes to National Insurance (NI) would have to be considered carefully.

UK Chancellor Jeremy Hunt announced a 2% reduction in the main rate and the abolition of Class 2 contributions.

While the island had maintained an 11% rate, which is 1% lower than the UK's current 12%, in order to "remain competitive", the effect of any reduction on the National Insurance Fund would need to be looked at, Dr Allinson said.

He said politicians had "already expressed concerns about the long-term viability" of the close to £1bn fund, which a government actuarial report had said would "run out by 2047 if we don't make changes".

Alex Allinson said any changes to NI contributions would have to be carefully considered

The treasury needed to be "really quite careful" that the "amount of money coming into the fund is sustainable" to provide future pensions and benefits, Dr Allinson continued.

However, he said having the rate of the April pension increase confirmed would not only allow the treasury "to know what we're dealing with in terms of a budget for next year", but would also be helpful for pensioners going into the winter months to know that the increase was coming in the spring.

Due to the island's reciprocal agreement over VAT, the extension of a zero rating for building materials and its extension to women's sanitary products would also be introduced.

But that would not have a "huge amount of impact" on the island's VAT share, Dr Allinson said.

Increases in tobacco duty, which are also directly linked to the UK, were also implemented on Wednesday evening.

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