Benefits fund projected to be exhausted by 2047

UK Government Actuary report warns population changes and CPI will impact fund

It's projected the Island's benefits fund will be exhausted by 2047.

That's according to a report into the Isle of Man Social Security Acts by the UK Government Actuary.

The UK body has published its five-yearly review into the financial condition of the Island's National Insurance fund, and the adequacy of contributions.

It finds that in the absence of additional income, the fund will be exhausted by the 2047-48 financial year - five years earlier than in the previous report, published in 2017.

As well as CPI pressures, the report says projected changes to the size and age of the population will mean a major increase in state pension recipients relative to the working age population.

Identifying pension as the biggest source of expenditure, the report warns a 10% higher than projected spend on the Manx State Pension would result in the fund being exhausted by 2043.

Based on the current population trends, the UK actuary expects the Island's population to fall by almost 1,000 residents by 2037.

Commenting on government's aims to grow the Island's population to 100,000 in the next 14 years, the report finds a significant increase in annual migration is the only way this target is likely to be achieved.

Currently, around 300 people move to the Island each year - the review says this needs to increase to 1,300 to meet the population target.

If this rises to 600, the actuary believes the exhaustion of the benefits fund will be pushed back by four years.

The UK Government Actuary does warn that its projections are very sensitive, and that changes to predicted fertility and mortality rates could have an impact.

In response, Treasury Minister Dr Alex Allinson says:

"The publication of the latest Government Actuary’s report into the Manx National Insurance Fund highlights a number of issues that will need to be addressed and will be referenced in this year’s Budget speech.

"The challenges it presents are not unique to our Island; other jurisdictions such as the UK and Guernsey are also facing similar issues with their Social Security schemes.

"The Island’s scheme is now independent from the UK which enables us to look at a wider range of solutions than previously considered, and I intend to come back to Tynwald later in the year with an update of how we will ensure the fund is sustainable in the long term and can continue to provide the foundation of our welfare system."