Public Sector Pensions To Undergo Dramatic Overhaul

18th March 2016

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Public sector employees will pay more for their pensions and receive fewer benefits at the end - if proposals released today to address the public sector pensions deficit are approved by Tynwald next month.

A report, called Fairness and Sustainability of Public Sector Pensions Schemes - Revised Proposals, that comes before Tynwald in April proposes a raft of new measures to address the deficit which currently costs the Manx taxpayer £44.9 million a year, rising to £96.4m in 2034/35.

The report, by the Public Sector Pensions Authority (PSPA), follows a Tynwald motion in December 2014 calling for further consideration of public sector pension reforms.

The proposed new measures, if approved, will see staff across public services paying up to 50 per cent more in pension contributions, in return for reduced benefits.

If accepted, the measures will affect members of the Government Unified Scheme. They will see their pension contributions rise by a further 2.5 per cent of their pay, probably to be phased in over three years. This will mean the average scheme member’s contribution is 10 per cent of their pay, an average increase of 35 per cent on current members’ contributions.

New members of the scheme, however, will pay more than 50 per cent more in the future, compared with current members.

Employers will contribute 15 per cent of their employe es’ pay, rising to 20 per cent after five years.

In future, members of the scheme will not see their pension benefits build up as quickly, though current members’ entitlements will not reduce.

Similar reforms are also under consideration for teachers, police and the judiciary, who are not part of the Government Unified Scheme.

The Prospect union, which represents more than 2,000 public sector staff, is seeking to negotiate on the plans, but acknowledges that the issue needs addressing.

Angela Moffatt, negotiations officer for Prospect, said: ‘We recognise, and have been part of, some positive aspects of the work that has been done and know that doing nothing is not an option.

‘But the scale of the changes the government are seeking is too much. This is not what members were expecting when Tynwald told the PSPA to negotiate.

She added: ‘This is the latest in a catalogue of disasters by this government. Once again the taxpayers and the public sector are being asked to pay the bill for their failings.

‘We warned them as far back as 2008, and repeatedly afterwards, that they were failing to tackle the issues and storing up problems – but we were ignored.

‘But the government knows when they get it wrong – someone else will pay for their mistakes.

‘Now they are ignoring our warnings again – and insisting they have the “solution”. How can they be believed?’

Source: IOM Today

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