Tynwald backs consultation on pension change plans

Plans to seek public views on proposals to make the Manx National Insurance Fund sustainable by slowing the rate of pension increases have been backed by Tynwald.

Treasury Minister Alex Allinson said fresh predictions had determined the fund would be exhausted by 2045-46, two years earlier than last predicted in 2023.

He said he wanted to make sure the public understood the "main issues" and the options that could be used to align the money taken out and paid into the fund.

Plans for a "double lock guarantee" instead of the 'triple-lock' principle to reduce withdrawals from the fund were put on hold earlier this year.

The change, which would have applied to those who retired after 5 April 2019, was initially due to be included in February's budget, but were removed after a backlash from MHKs in favour of a debate about the fund this month.

Allinson told Tynwald members the Treasury's favoured option remained to use Manx inflation for pension uplifts with a 2% floor, representing a break away from rises based on UK inflation, average earnings, or 2.5%.

He said the change would ensure pensions increase by a minimum of 2% even if inflation was lower, and that the payments would "always increase in value in line with prices".

Other options considered, such as increasing state pension age or increasing the number of years required to qualify for a pension, had "no material impact" on the exhaustion date and had therefore been discarded, he said.

During an hour-long debate, a bid by Julie Edge MHK for a commitment that all people should continue to pay National Insurance (NI) contributions until reaching state pension age was rejected.

She had argued that a disparity between the length of time public sector workers and private sector workers pay into the fund was "unfair".

Lawrie Hooper MHK said the proposals would mean younger people would be paying in the same amount to ultimately get less out of the fund, and suggested reducing contributions by 1%, which "would not have a material impact" on the fund's exhaustion date.

He also said that all working people should pay NI even if they were above pension age.

MLC Paul Craine noted that a period of above inflation growth of wages might leave those on a pension "lagging behind in terms of living standards".

But Allinson said the Treasury was looking to slow the rate of increase for Manx pensions to get a "better degree of intergenerational fairness and sustain the National Insurance Fund".

He told members his department was committed to looking at a range of options through the consultation.

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