At its sitting on 15th March 2016 Tynwald approved a new reciprocal agreement on state pensions with the United Kingdom.
The new agreement provides that people who reach state pension age on or after 6th April 2016 and who have paid or been credited with National Insurance contributions in both the Isle of Man and the United Kingdom will be entitled to separate state pensions from the United Kingdom Government and the Isle of Man Treasury.
Only contributions paid, credited or treated as paid in the Isle of Man will in future count towards the Isle of Man state retirement pension and the Manx Pension Supplement. Similarly, only contributions paid, credited or treated as paid in the UK will count towards the UK’s new state pension. People who have contributions in both countries will have to make separate claims for their Isle of Man and United Kingdom pensions.
It is possible that in the transition to the new rules a very small number of people would be worse off overall when compared to the current rules. However, to ensure that no-one in the Island will be worse off a new scheme called “Pension Top-up” is being introduced, which will make good any shortfall.
Speaking on the matter, Bill Henderson MLC, political member of the Treasury with special responsibility for Social Security, said: “Breaking away from the United Kingdom paves the way for the introduction of a truly Manx state pension, which Tynwald resolved to do last July. It does mean that those who have paid or been credited with National Insurance contributions both here and in the UK will have to make separate claims for separate state pensions, however they will only have to do this once and Treasury officers will provide help if necessary. Treasury is keen to ensure that no-one in the Island is worse off overall under these new rules than if the current rules had applied to them and has designed the Pension Top-up scheme to guarantee that this is the case.”
Mr Henderson went on to say: “The requirement to make two separate claims for state pensions and the existence of the Pension Top-up scheme will be explained to people when they are invited to claim their Isle of Man state retirement pension, usually 4 months before they are due to reach state pension age. They will be given details of how to claim their UK state pension and staff will be available to help people fill in their claim forms, if necessary. Isle of Man residents who are entitled to state pensions from the UK will see those pensions uprated each April in the same way as if they were resident in the UK.”
He added: “These changes will not affect current pensioners. Nor will they affect people who have only ever lived and worked in the Isle of Man.”
Tynwald has also agreed to abolish the non-contributory retirement pension for people aged 80 or over and the ability for people to be able to defer claiming their state retirement pension in return for a higher state pension when they ultimately claim it or a lump-sum with interest added.
Pensioners already getting the non-contributory pension will continue to do so. People who are currently deferring their state pension can continue to do so, however the provision will not apply to those reaching state pension age on or after 6th April 2016.
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