The Treasury has announced plans to introduce a Manx Pension Guarantee.which would rise annually by either the preceding September’s figure for Manx CPI inflation or 2%, whichever is higher.
It also sets out a plan that the fund, which is currently due to run out in just over 20 years, should never fall to less than twice annual expenditure.
Details of the proposal are contained in a report published on the Tynwald Register of Business ahead of next month’s sitting: Future Uprating of the Manx State Pension.
The majority of pensioners in the Isle of Man will be unaffected as they retired before the introduction of the Manx State Pension and will continue to see their Retirement Pension increase in line with the UK and its ‘triple lock’ policy.
Implementing this change would therefore only affect those who reached state pension age after April 5 2019. The impact, however, will ensure the Fund is sustainable and sufficient to cover future expenditure on benefits and pensions.
Investment
The plan also sets out that the fund can only be invested in certain areas.
Notwithstanding the restrictions placed on fund expenditure by the Social Security Administration Act 1992 any surplus assets within the Fund will only be invested in health and social care, education and employment or in support of the economy more generally, this will still be subject to Tynwald approval.
Income
Minister Dr Alex Allinson MHK said: “Driving this change is the need to preserve the National Insurance Fund for our community into the future. It’s about intergenerational fairness, and accommodating the needs of today’s children and grandchildren.
“Tynwald Members were clear when the matter was debated in November that workers and businesses should not be forced to bear the burden of paying increased contributions to the Fund.
“Equally, the need for pensioners’ income to rise by an amount that reflected the cost of living in the Island was also essential.
“By introducing the Manx Pension Guarantee, pensioners will benefit from the certainty of knowing that their income will rise each year to match changes in the cost of living.
“They will also know that the Fund will remain in a healthy and sustainable condition, and is able to provide both for their pensions and for those who retire in the future.”
How will the change affect pensioners in the next financial year?
Pending Tynwald approval of next month’s Budget measures, from April, the Manx State Pension, which is paid to those who reached state pension age after 5 April 2019, will rise in line with the Manx Pension Guarantee.
It is currently £241.50 a week and will increase by 2.2% (reflecting September 2024 Manx CPI inflation) to £246.75 a week from 7 April 2025. This equates to an increase in annual income from £12,558 to £12,831.
The Retirement Pension will continue to rise each year in line with the UK’s ‘triple lock’ policy and affects the majority of pensioners in the Isle of Man. It is currently £169.50 a week and will increase by 4.1% to £176.45 a week from 7 April 2025.
This equates to an increase in annual income from £8,814 to £9,175.
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