The Council of Ministers is set to seek approval at the April sitting of Tynwald for its proposed reform of public service pensions.
Government is seeking to provide for long term security of public service pensions for its employees, and in doing so it is proposed to make arrangements simpler, less costly to the taxpayer, and less vulnerable to UK changes over which the Island has no control.
The cost to Government of staff pension schemes is rising annually and is expected to be about ?48 million gross in the current financial year.
Subject to Tynwald approval, a new unified pension scheme - replacing 15 of the current schemes - would come into effect in 2012 with a standard contribution rate of 5%.
About one-third of members currently pay less than this and would see a phased increase in contributions of no more than one per cent a year.
This would still be a final salary scheme, on the grounds that moving to a defined contribution scheme would place an even greater strain on Government’s finances.
Under the revised proposals members could opt to preserve their existing arrangements for payment of an additional contribution, though such protection would be available at no extra cost for members within seven years of their current normal pension age.
In his foreword to the Council of Ministers report on the proposals, Chief Minister Tony Brown MHK said that the Council and consultants Hymans Robertson have listened carefully to consultation feedback and comments, and adapted the original proposals in response.
He also explained that a primary reason for change is growing concern over having Island schemes linked to those of the UK: "Recent developments such as plans to cap pensions in the UK show only too clearly how little control we have over our public servants’ pensions arrangements.
"I am satisfied that Council’s recommendations are a very important step in the right direction and balance public sector workers’ interests with those of the current and future generations of taxpayer."
