There is a £10m-plus annual shortfall in contributions to the government’s unified pension scheme.

A deficiency of £10.35m, down from £13.697m in 2018, is recorded in the scheme’s latest annual accounts to be laid before this month’s Tynwald sitting.

The auditors’ report said the deficiency is considered ’significant’ for the scheme.

But this is a notional actuarial shortfall in contributions on the basis that government employers pay a fixed 15.42% contribution compared with the actuary’s recommended 20.3% contribution.

Contributions and other income during the year to the end of March 2019 totalled £64,570,000 but benefits paid and other outgoings totalled £74,922,000.

Government accounts laid before Tynwald’s January sitting showed that the unified pension scheme’s overall liability rose by £448m in 2018-19 to an eye-watering £4,171m, principally due to an actuarial loss of £324m.

The number of the scheme members increased last year from 18,012 to 18,416, with the number of active members up from 9,536 to 9,744.

Members have seen a series of increases in their contributions and reductions in benefits to make their pension schemes more affordable.

contribution

Contribution rates for existing members have risen by 2.5% in phases since April 2018.

As the unified pension scheme is unfunded, the gap between contributions and benefits paid out is met by government, and is currently covered by drawing down from the public service employees pension reserve.

Some £33.318m was transferred in 2018-19 against a budget of £40m.

When this reserve runs out in 2021-22, it is expected to put an extra £45m pressure on the general revenue position.

A report to Tynwald in 2016 suggested that government funding will be needed annually, reaching a forecast £155.6m by 2034-35.

Ian Murray, chief executive of the Public Sector Pensions Authority, said: ’The auditors have a duty to draw attention to the fact that government has determined to fix its contributions at 15.42% compared with what the actuary recommends at 20.3%, resulting in a shortfall. However, the reality is that government meets any funding shortfall in cash terms in any event and therefore there is no compulsion to meet the actuary’s recommended contribution rate.’

Tynwald last month approved a cost sharing plan to rein in the costs of the public sector pension scheme. A call to adjourn the debate was made by ex-minister Chris Thomas, who had been in charge of the reforms.