The Island’s National Insurance Fund has recorded a £10.4m shortfall.
It’s the second year in a row that spending from the Fund on state pensions and other benefits has exceeded NI contributions paid into it.
The shortfall, which has had to be covered by a transfer from the Fund’s investment income, is revealed in the latest Manx National Insurance Fund accounts to be laid before the November sitting of Tynwald.
The Fund’s operating account went into deficit for the first time in the 2012/13 financial year, with a shortfall of £14m.
Treasury Minister Eddie Teare MHK said: ‘The information in these accounts is further confirmation that the island has reached a turning point in its welfare system.
‘Following the detailed review of the system by the consultants Ci65, we must now start to make changes to ensure that our social security system is sustainable, fair and that it does not put an undue burden on future generations.”
The Ci65 report is due to be made public in the near future.
In the current financial year, Treasury will spend £190.2m on NI funded benefits, mainly on the state retirement pension, and £78.2m on general revenue funded benefits such as income support and child benefit.
In the same period it is estimated that £170m will be raised from NI contributions.
In May this year a report by the UK government actuary’s department estimated that unless changes were made, the Manx NI Fund would be exhausted by 2054, with spending on the state pension projected to rise by more than 500 per cent in real terms over the next four decades.