The Isle of Man’s National Insurance fund is forecast to collapse in 20 years’ time as the population ages and more resources are spent on older people.
Chief Minister Allan Bell MHK today circulated all Members of Tynwald with further information on the major review of the future of the island’s National Insurance fund being, which is carried out for the government by specialist consultants.
The £650 million fund, which pays for state retirement pensions, the Manx pension supplement and a range of other social security benefits, is heading for a dramatic decline as the proportion of retired people increases and benefits paid out of the fund exceed NI contributions paid in.
Over the next 30 years the number of over-65s is projected to almost double from 15,000 to 29,000.
The National Insurance fund is forecast to start collapsing in around 20 years’ time and to run out completely by the 2050s, leaving the younger generation with a bleak future in terms of state support for their retirement.
The review work is in two parts.
Phase I, costing £250,000, was put out to tender in December 2012 and produced an initial assessment and planning report presented to the Council of Ministers in September 2013.
Phase II, costing £750,000, is taking place now and is being carried out by Ci65 with the same personnel who conducted phase I while working for RSM Tenon.
The phase II work is looking at a wide range of options for the future of National Insurance and social security policies.
The consultants are due to report back to the Council of Ministers this summer and the outcome will be presented to Tynwald for its consideration in due course.
In the current financial year Government is expected to spend £275 million providing social security benefits – one third of its total gross expenditure – including £129 million on retirement pensions and £37 million on the Manx pension supplement.
The National Insurance Fund pays for £190 million of the benefits bill, the rest coming from general revenue.