State pension age of 74 proposed for Isle of Man
People living on the Isle of Man won't receive their state pension until the age of 74, under proposals by The Treasury Isle of Man Government.
Pensions experts are already warning that, if adopted, it could lead to a rapidly increasing state pension age in the UK.
In a review of the IoM's social security and National Insurance schemes, it proposes linking the state pension age to longevity so that retirement makes up 30% of someone's working life.
This would lead to a state pension age of 74 for anyone born after 2011.
It also makes a number of key recommendations, including:
- Extending the qualification period for a full state pension to 45 years.
- Introducing a single-tier state pension starting rate of £180.
- Workers continuing to pay National Insurance contributions past state pension age.
"If you think we've got challenges with our state pension, be glad you don't live in the Isle of Man," says Tom McPhail, head of pensions research at Hargreaves Lansdown.
"We're not quite in such radical territory yet, here in the United Kingdom and there are important differences between the IoM and the UK. In terms of demographics and the support ratio of workers to retired population, the challenge in the IoM is more severe than in the rest of the UK.
"Nevertheless there are also some close parallels and the scale of radical reform called for by this review in the IoM points to the kind of shift in state pension provision that we should expect over here in the longer term."
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A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.