State pension triple lock AXED in Isle of Man to 'accommodate needs of today's children'

This would see annual pension payments increase from £12,558 to £12,831 for newer pensioners. The move marks a significant departure from the current triple lock principle, which mirrors the UK system of increasing pensions by the highest of three measures: 2.5 per cent, CPI inflation, or average wage increases.

Those who reached pension age before April 2019 would continue to receive higher increases, with a 4.1 per cent uplift planned for the coming year.

The changes come as part of efforts to preserve the Isle of Man's National Insurance Fund, currently valued at £1.09billion.

Every year, the fund receives top-ups from surplus worker contributions after benefit and state pension payments.

However, a report released in October warned the fund could be depleted by 2047-48 if the current system remains unchanged.

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The Treasury has identified increasing life expectancy, leading to longer pension claim periods, as a key factor in the fund's projected exhaustion.

To ensure long-term stability, the Treasury has proposed that the fund should never fall below twice the annual expenditure level.

According to Treasury officials, the proposed reforms aim to keep the fund "sustainable and sufficient" to meet future benefits and pension demands.

Treasury Minister Alex Allinson described the revised scheme as "about intergenerational fairness, and accommodating the needs of today's children and grandchildren".

He emphasised that pensioners would benefit from "the certainty of knowing that their income will rise each year to match changes in the cost of living."

The changes would ensure the fund remains "in a healthy and sustainable condition," Allinson said.

This would make it "able to provide both for their pensions and for those who retire in the future," he added. The new system creates a two-tier approach to pension increases.

Pensioners who reached state pension age before April 2019 will see their payments rise from £8,814 to £9,175 for 2025-26, before any additional Manx Pension Supplement.

Meanwhile, those who reached pension age after that date will receive the new guaranteed rate increase. The Treasury noted that the majority of current pensioners would not be affected by these changes.

The proposed changes will be included in the Isle of Man Budget measures to be presented next month.

Tynwald, the Isle of Man's parliament, will vote on the reforms during the February budget-setting process.

If approved, the new pension system will take effect from April 2025. The changes represent a significant shift in how the island manages its pension increases, moving away from the UK-style triple lock system.

Concerns have been raised over the long-term viability of the state pension in the UK due to rising life expectancy and population growth, which means a growing cost on the taxpayer.

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Treasury Minister Dr Alex Allinson MHK said: "Driving this change is the need to preserve the National Insurance Fund for our community into the future. It’s about intergenerational fairness, and accommodating the needs of today’s children and grandchildren.

"Tynwald Members were clear when the matter was debated in November that workers and businesses should not be forced to bear the burden of paying increased contributions to the Fund.

"Equally, the need for pensioners’ income to rise by an amount that reflected the cost of living in the Island was also essential. By introducing the Manx Pension Guarantee, pensioners will benefit from the certainty of knowing that their income will rise each year to match changes in the cost of living.

"They will also know that the Fund will remain in a healthy and sustainable condition, and is able to provide both for their pensions and for those who retire in the future."