CHANGES to public sector pensions are due to come into effect from next April, after Tynwald approved the unified pension scheme.
Chief Minister Tony Brown MHK told Tynwald members the proposals for a unified pension scheme for about 7,000 workers were ‘very different’ from those originally put forward.
And he said there was now ‘broad support’ for the scheme.
At last week’s sitting, he presented the Council of Ministers’ response to the second consultation following revised plans.
A recommendation that Tynwald give its approval for the scheme to progress towards implementation was approved.
It means that negotiations can get under way with the relevant staff bodies.
As well as making public service pensions affordable and simpler to administer, Mr Brown said the unified pensions scheme will give Tynwald control over pensions.
At present, the 14 existing schemes being brought under the scheme are controlled by the UK Government and approved by Tynwald.
‘The UK is now proposing that its public service will work for longer, get less when they retire and pay more towards their pension benefit,’ he said.
Mr Brown said that to do nothing was not an option as the current £240 million pension reserve will run out by the year 2029.
Douglas South MHK Bill Malarkey voted against the recommendations, saying politicians should be leading the way with pension reform.
‘We are behind what we are asking public sector workers to do,’ he said. ‘We should be at the front.’
Mr Brown said reform of Tynwald members’ pensions was progressing and would come into force three months later than those of public sector workers.
Onchan MHK Peter Karran (LibVan) said a final salary pension scheme was not a viable option. He voted against the motion, saying the scheme was ‘unaffordable and unsustainable in the long term as it fails to address the escalating future liability on public sector pensions’.
He failed to get support for an amendment, calling for the Council of Ministers to formulate revised proposals for public sector pensions ‘that will stop the future liability on public sector pensions from increasing’.
Under revised proposals drawn up by Hymans Robertson after consultation with union representatives, there will be a flexible retirement age between of 55 and 75.
There will be a single level of benefits for new members and existing members who do not opt to contribute more.
Under the standard scheme, members will receive a pension of two thirds of final salary at age 65 if an employee joins at age 20.
The standard employee contribution rate will rise from 1.5 per cent to 5 per cent.
For existing members, there will be voluntary protection of existing rates of pension and lump sum at existing normal pension age via an additional contribution. For civil servants, for example, the extra contribution will be 2.75 per cent.
Only Mr Karran and Mr Malarkey voted against the motion.