OCCUPATIONAL pensions paid to retired public sector workers are to be increased by 3.1 per cent from April 1.
The increase is the same as in the UK, where the basis for such inflationary rises has been changed from the Retail Price Index (RPI) to the Consumer Prices Index (CPI).
Tynwald will be asked to approve the order making the change next week. Treasury Minister Anne Craine MHK explained: ‘This order provides for the annual increase to public sector occupational pensions to allow for rises in the cost of living. It is important that this established policy is maintained in order to protect the affected pensioners’ real incomes.’
Occupational pensions for retired public sector workers such as medical staff, teachers and civil servants in the Isle of Man are increased to allow for inflation at the same rate as public sector pensions in the UK.
The UK Government says it has changed its basis for indexing both social security benefits and public sector pensions from the RPI to the CPI is on the grounds that CPI is considered a more accurate measure of inflation.
But latest Treasury figures show the island’s RPI is 6 per cent but the CPI is lower – at 5.8 per cent. Similarly in the UK, RPI is 5.1 per cent and CPI is 4 per cent.
The UK Government is currently consulting on the impact of using CPI as the measure of price increases on private sector occupational pension schemes. Some of the proposals included in the consultation document are included in the new UK Pensions Bill, which is expected to pass into law this year.
The Manx Government is currently consulting the trades unions concerning the introduction of the Isle of Man unified pension scheme for local public sector workers which aims to be affordable and sustainable for the Manx taxpayer.
An undertaking has been given to maintain the existing public sector pensions arrangements in line with the UK prior to the completion of the consultation and the subsequent implementation of the unified scheme.
The Isle of Man Pensioners Association is concerned at the change to CPI for uprating state and occupational pensions and is urging residents to sign a petition to be presented to the UK Government.