Taxes will not rise but the pension supplement, retirement age and means testing are all likely to come under scrutiny as the government battles to solve an impending pensions crisis.
Treasury Minister Eddie Teare MHK told iomtoday the government would not shirk from addressing the issue and all universal benefits had to be considered.
‘I am hoping to collate all the information we have, then embark on a series of road shows around the island to explain the problems we have to people and say we are working on various suggestions,’ he said. ‘We are keen to plan for the next generation not the election.’
The looming crisis was highlighted last week in the Manx Independent.
As the number of people over the age of 65 is predicted to increase by 93 per cent from 15,000 to 29,000 in the next 30 years, the national insurance fund is expected to start collapsing in about 20 years’ time and by 2050 it could be completely exhausted.
Phase one of the review, costing £250,000, reported to the Council of Ministers in September last year, and phase two, costing £750,000, is examining options to shape future National Insurance and social security policies.
The second report will go to the Council of Ministers in the summer before being presented to Tynwald.
One of the issues under scrutiny is the Isle of Man pensions supplement. UK pensioners, in round figures, receive £113 a week but for pensioners in the Isle of Man the £53 supplement takes the total up to £166. During this financial year, pensions will cost £129m and the supplement will add a further £37m to the total, Mr Teare said.
Another possibility is raising the retirement age. This is currently 65, and set to rise to 67 in the UK between 2026 and 2028.
‘When pensions were first introduced, they were means tested and people lived an average of two years after retirement. Now people often draw a pension for 20 years.’
Mr Teare added means testing had to be a possibility as the number of pensioners rises and the number of working people supporting each one falls.
Higher taxation was ruled out because it would make the island less attractive to investors. A cap on public sector pensions was undesirable as it would discourage essential workers – two thirds of whom work in health.
‘Most are recruited from outside so our terms and conditions have to be similar or we wouldn’t get staff,’ Mr Teare said.
On the cost of the review, he said: ‘If it delivers results it will be worth it.’