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by Department of Social Care

The Department of Social Care has published the report of the latest review of the Isle of Man National Insurance Fund (the Fund) which covered the 5-year period to 31st March 2007.  This report will be laid before Tynwald at its February sitting.

The results of the review were not surprising:  the population is living longer, with life expectancy predicted to continue to increase by over one year each decade, and consequently drawing their state pension for longer.  As a result, if no action was taken, the Fund (which is currently valued at £650million) would be exhausted by around 2050.

However this is not a cause for undue concern as Isle of Man Government, like its counterpart in the UK, is already taking action.  The Isle of Man has reciprocal arrangements with the UK on social security including the state pension and therefore, subject to Tynwald approval, will mirror the measures taken to sustain the Fund into the future.

These will raise the state pension age for women to 65 by 2018 and to 66 for both men and women by 2020.  The UK has also announced its intent for a further rise of the state pension age to 67 by 2028 followed by appropriate rises periodically thereafter.  These further rises in state pension age are expected to be in line with rises in life expectancy. 

The Chief Minister recently announced that the Island’s benefits system and pension policy will be reviewed and other options for the future sustainability of the Fund will be further considered as part of these reviews.  The Department of Social Care and the Treasury have commenced this work and will report to Council and Tynwald later this year.

The Department of Social Care and the Treasury are also taking this opportunity to make an announcement concerning pension policy.  The two Departments continually monitor legislative changes in the UK.  One recent legislative change made in the UK compels employers to offer an occupational pension to employees who are then automatically enrolled and must make contributions from earnings.  The Isle of Man does not have the same issues as the UK as more employees have access to such occupational pensions and also the state pension is more generous due to the Manx Pension Supplement.  As a result, the two Departments and Council of Ministers are satisfied the UK policy is not required in the Isle of Man. 
 
The Minister for Social Care Hon Chris Robertshaw MHK said:  “This review of the Manx National Insurance Fund has highlighted the need to review our pension policy and address the fact that people are living longer and therefore should expect to work longer to fund their retirement.  This is fair as it will enable each generation to enjoy the state pension for roughly the same number of years as is the case currently.”

The Treasury Minister Hon Eddie Teare MHK said:  “I believe the policy proposals to raise the state pension age in line with life expectancy are the right way to ensure we can all enjoy an adequate state pension that is sustainable for future generations.  Also I am content that the UK’s policy of auto-enrolment into workplace pension schemes is not right for the Island.  Together, these policies will stand us in good stead.  My Department will work closely with the Department of Social Care on what further policy changes we may need to ensure our state pensions and social security benefits continue to meet the Island’s needs on an affordable basis.”
 
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Read the rest here:
Report Issued on the Latest Review of the Isle of Man National Insurance Fund