State pension proposal 'guarantees' future of fund

Replacing the "triple lock" state pension for some Manx residents would "guarantee the long-term sustainability" of the National Insurance Fund, the treasury minister has said.

The proposed change, set to be applied to about a third of pensioners on the island, would see payments rise by 2% or inflation each year, whichever figure was higher.

Alex Allinson said the move would be "a way of taking control of our pension schemes" and would provide "certainty" to those who retired after 5 April 2019.

The switch will form part of the Isle of Man Budget measures to be put forward for approval in February.

The £1.09bn 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.

But a report released in October forecast, if the system remained, the fund would be exhausted by 2047-48,

Increases are currently based on a formula adopted in the UK that increases pensions annually by the highest of three options, namely 2.5%, CPI inflation, or average wage increases.

If approved by Tynwald, people who retired after 5 April 2019 would see their state pension rise by the higher of either the Manx CPI inflation figure issued in the previous September or 2%.

Allinson said the change would "address a decades-old problem" and if no alternations were made there would "be no money in the fund to act as a buffer" in future.

The new Manx Pension Guarantee, was "a way of taking control of our pension schemes" and ensuring those eligible "get a decent pension that corresponds to cost of living on the Isle of Man rather than in the UK".

This would give retirees "certainty their pension will go up every year" and "guarantee the fund will be there to look after them in the future", he added.

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