Isle of Man’s NI Fund is not in crisis, says MHK backbencher

Chris Thomas MHK

Chris Thomas MHK

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Backbench MHK Chris Thomas has accused the government of being ‘disingenuous’ over its claims that the National Insurance Fund is in crisis.

In the House of Keys this week, he pointed out that the NI Fund has actually grown, increasing by £25m in two years to £671,684,960 and is 60 per cent larger than the fund in Northern Ireland.

The Douglas West MHK said: ‘It’s disingenuous to say we’ve got a crisis.’

He urged the Treasury Minister Eddie Teare to ‘put on public record that the fund went up by £25m rather than going down by £10m.’

Figures released by the Treasury last month show that for the second year in a row the NI Fund recorded a shortfall. This was £10.4m in 2013-14, which had to be covered by a transfer from the Fund’s investment income. But Mr Thomas described that figure as ‘blatently misleading’.

He told the Manx Independent: ‘It is true that spending from the Fund on pensions and benefits exceeded NI contributions paid into it, but this was more than offset by the £37m of investment income – dividends and other income - from the £700m plus value NI fund.

‘Moreover, more than half of the £10.5m operating account deficit in 2013/14 was unusual external consultancy fees and a UK-IOM NI settlement for the year which was significantly higher than the previous tax year.’

A report by consultants Ci65 concludes the NI Fund will be exhausted by 2047 unless there is radical reform.

It recommends a raft of measures to make it sustainable in the long-term, including raising the retirement age in phases so that a person born today would have to work until they are 74 in order to claim the state pension.

Mr Teare accused Mr Thomas of wanting to avoid making difficult decision. ‘He would leave scorched earth for the next generation,’ he said.

Mr Thomas said the government had four to five years to make a decision and should not have spent three quarters of a million pounds on consultants to make a ‘politically driven decision’.

Mr Teare confirmed Ci65 Ltd was paid £639,999 for the second phase of the review.

John Houghton (Douglas North) asked if Treasury officers could have assimilated the same information without going to ‘all of this unnecessary expense’.

Mr Teare’s reply, a simple ‘no’, was the trigger for an increasingly bad tempered exchange that continued throughout much of question time. The Minister, to whom 12 questions for oral reply and seven for written reply were directed, said the reason why his officers could not have put similar proposals together was because they were ‘too busy answering questions’.

Mr Houghton suggested if the Treasury Minister was fed up of answering questions he should consider his position.

Alfred Cannan (Michael) asked that phase one of the review, conducted by RSM Tenon, should be released to the public immediately. Mr Teare said he would ‘consider the position’.

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