More than £86 million has been spent on lump sum pension payments to public sector workers over the last five years, it has been revealed.
But Alfred Cannan, vice chairman on the Public Sector Pensions Authority, insisted that such lump sum payments to pension scheme members on retirement actually reduced the on-going liability and future costs.
Questions about lump sums drawn from government pension schemes each year since 2007 were raised in the House of Keys by Castletown MHK Richard Ronan.
In his written reply, Mr Cannan revealed that lump sums totalling £86,758,891 had been paid in that period to a total of 1,947 retirees.
Amounts paid out had more than doubled from £10 million in 2007 to £21 million last year.
Highest lump sums ranged in size from £377,730 - paid to a member of the civil service scheme in 2010-11 - to just £3,781 to a Manx Radio employee in 2009-10. In some years, in some of the pension schemes, no lump sums were paid out at all.
But Mr Cannan said: ‘It is worth noting that members taking a lump sum would serve to act in the best interests of the scheme as this will reduce the on-going pension liability, which given current mortality projections, will act to contain future costs.’
He pointed out that the payment system used to extract that information did not distinguish between lump sum payments on retirement and those paid on death in service but it was estimated that about £4 million had been paid in the past five years in relation to members who had died in service.
And he told MHKs that it was not possible to confirm how many retiring members had taken a lump sum compared to those who had not. But it was estimated that about 90 per cent of retiring members take the lump sum where this is an option.
Mr Cannan said it was not possible to predict with any accuracy how much would be payable in lump sums in future years as members can choose the age at which they wish to retire and the PSPA would not generally know which might be contemplating taking early retirement benefits.
Mr Ronan also asked for details of the size of employee contribution for each pension scheme. Figures released in the written reply show the contributions range from 11 per cent for airport firemen to 1.5 per cent for some manual workers.
Mr Cannan pointed out that an individual’s lump sum on retirement is calculated in accordance with the rules of each pension scheme and is based on length of service and final pensionable pay - so someone with longer service and higher pay will receive a higher lump sum. Lowest lump sums paid were likely to be in the £100s.
Before the government’s unified pension scheme was introduced in April last year, lump sum payments were an option rather than provided automatically to members.
