MANX SUPPLEMENT MYTHS
A letter submitted to IOMPA by a member of the public
The letter below was sent to IOMPA on the 8th October, 2011, by a non member who had failed to have it printed in the relevant Isle of Man Newspapers "Letters to the Editor" section i.e. "Your Island Your views" or "Opinions".
The figures are all taken from "The Pink Book"-Isle of Man Budget 2010/11
The bottom section is the expanded figures.
The person provided their name and address which has been verified but asked that it not be released.
The Isle of Man is a land of legend, fairy tales and myths, while Politics is the most beautiful of lies and the biggest circulated by the government, past and present, that UK pensioners have not "paid in" for the Pension Supplement, a rumour to cover up their despicable discrimination of the elderly.
In fact, no one has "paid in".
Those in receipt of this benefit have only paid in the compulsory National Insurance Contributions, which would have been payable regardless of the pension supplement - which contains many anomalies. NI contributions have nothing to do with the high cost of living on the island. But have been used as a convenient ploy by government.
How many MHK's/MLC's have read the Pink Book- IOM Budget 2010-11?
Page 41. Heath & Social Security -Net Expenditure - Service Analysis
Income from NHS Contributions (IOM) Act 1971.... £34,208,000
Income from National Insurance Investment A/c...... £31,718,000
Total......................................................................... £65,926,000
Page 12 Social Security Benefits
Total cost of Benefits paid................... £224,600,000
Less Income from NHS contributions
Plus Nat. Ins. Investment Account........ £65,926,000
Where does this deficit of.................... £158,674,000 come from?
It can only come from taxation. The Government has no money of its own. All the money comes from and belongs to the people.
These figures prove that UK Pensioners not in receipt of the Pension Supplement are "paying in", via taxation, for a benefit they do not receive!
They also contribute a massive £30 million every year in revenue to the Isle of Man coffers, from their UK State Retirement Pension, paid by UK but spent on the island, so in fact they pay twice.
During the boom years when the Isle of Man was receiving 3 times more VAT from the UK than they were entitled to, the government revelled in the 'land of bounty' when politicians awarded themselves several generous salary increases, and the pension supplement reached 50% of the basic State Retirement Pension. While UK pensioners not receiving the pension supplement saw their standard of living plummet due to spiralling food and fuel costs. (No change there).
Manx pensioners resident in UK receive Winter Heating Allowance and Cold Weather payments, even though all their NI contributions were paid in Isle of Man! They are treated equally, no discrimination there! What does this say about the Manx Government?
If government officials and MHK's feel they need 3 pensions, the State Retirement Pension, the gold plated government pension and the Pension Supplement (both free from contributions) when they retire. Why do they think it is acceptable for resident old age UK pensioners to exist on the basic (lowest in Europe) State Retirement Pension. If a "cost of living allowance" i.e. Pension Supplement, was needed it is needed by ALL pensioners!
When the new State Retirement Pension comes into force in 2015 at £140 per week, it will only benefit new pensioners-those already retired will still be on the old rate of £97.65 a week, and already experience a much lower standard of living than those who receive the pension supplement.
The fact that this shameful discrimination of a minority group of UK old age pensioners has been allowed to take place and continue, is an indication of just how little concern the MHK's have for the welfare of their constituents, and proof that common decency has failed, and created a divisive and unfair divided society.
The new government will have to resolve this nakedly unfair system which should never have been allowed to happen or continue. They need to remove this shameful stain from the Isle of Man's reputation.
The "economic and social inclusion for ALL in the community" so trumpeted by the previous government does not exist.
Far from it. Like so many things in the Isle of Man - it's just another MYTH.
PINK BOOK FIGURES
Income from NHS Contributions page 41.............. £34,208,000
Income from N.I. Investment Account Page 41...... £31,718,000
Total...................................................................... £65,926,000
Total cost of benefits paid Page 12.........£224,600,000
Income from NHS Cont (as above)..........£65,926,000
Deficit................................................... £158,674,000
Where does this deficit come from?
It comes from NI Fund.................................... £155,200,000
and General Revenue......................................... £69,500,000
Page 12 - Total cost of social security benefits...£224,700,000
Total cost of following 4 benefits
1. Retirement Pension..............£104,500,000
2. Pension Supplement...............£30,400,000
3. Retirement Pension Premium...£2,000,000
4. Christmas Bonus......................£1,900,000
Total.........................................£138,800,000
So income from N.H. Service Contributed by Employees and Employers Page 41
£34,208,000
Divided by approx £17,000,000 by employees (11% contribution)
Divided by approx £17,208,000 by employers (12.8% contribution)
So just taking the 4 benefits above £138,800,000
minus Employees contribution.........£17,000,000
.............................................Total £121,800,000
So where does this deficit come from?
Answer: THE TAXPAYER
Note: Government figures state Benefits from Nat. Ins Fund....£147,900,000 (2009/10)
.................................................................................................£155,200,000 (2010/11)
A total in just 2 years................................................................£303,100,000
PENSION SUPPLEMENT - SLIDING SCALE
A further letter submitted to IOMPA 19th October, 2011.
A sliding scale is seen by some as a solution to the existing unfair Pension Supplement.
It would be adding another layer of bureaucracy on top of an already flawed system, leaving the oldest and longest resident (and previously resident in the UK) pensioner neglected and airbrushed out of society.
As National Insurance Contributions are reciprocal between the IOM and UK it therefore follows that if the prescribe number of years N.I. Contributions have been paid to qualify for the State Retirement Pension regardless of where they are paid, that person is resident in either place IOM or UK. Therefore that person should receive the benefits of that place - in this case the Pension Supplement.
The IOM Government own figures (Pink Book) show a large deficient between income and outgoings regarding benefits, i.e. Pension Supplement with taxpayers funding the deficit.
The Government cannot have it both ways.
They accept UK pensioners as resident taxpayers.
They deny they are part of the reciprocal agreement and whilst their State Retirement Pension is paid by UK it is spent in IOM!
Temporary cold weather payments should be made to all resident UK pensioners not in receipt of the Pension Supplement. With ever increasing fuel prices, and another cold winter forecast, keeping warm is a major concern for old people who are less mobile. The money would not be hoarded for a rainy day - that rainy day is here now! This would equate to cold weather payments made to Manx pensioners in UK, who receive a winter fuel allowance, plus cold weather payments, and are also in line to receive extra cold weather payments from fuel companies.
UK old age pensioners in the IOM get neither the pension supplement nor the winter fuel allowance.
EQUALIZATION: A Pension Supplement "Pot" would be a solution and would not cost the government any more money.
12,823 pensioners receive the pension supplement - 31/3/2011 government figures.
2,100 UK pensioners do not - Census figures 2006. 2011 are expected to be same.
14,923 pensioners divided into 32.1million (cost of pension supplement) works out at £41.37 each per week.
ALL PENSIONERS WITH 10 YEARS RESIDENCY COULD RECEIVE A FLAT RATE OF £41.37p EACH AND THIS COULD EASILY BE HIGHER IF PROPER PROCEDURES WERE IN PLACE TO ENSURE THAT RECEPIENTS WERE INDEED RESIDENT-NO CHECKS ARE MADE BY GOVERNMENT.
FACTS AND FIGURES 27th October, 2011
http://www.gov.im/lib/docs/socialcare/security/ni1962011web.pdf
http://www.gov.im/lib/docs/socialcare/security/ps1iomapril2011.pdf
Per Week
State Retirement Pension.............£102.15
Pension Supplement (100%)..........£49.85
....................................(60%)..........£29.85
12,823 pensioners receive the pension supplement - 31/3/2011 government figures.
2,100 UK pensioners do not - Census figures 2006. 2011 are expected to be same.
14,923 pensioners divided into £32.1million (cost of pension supplement) equals £41.37 each per week.
Present cost of pension supplement recipients-made up of combination of 100% and 60% 2011-2012 "Pink Book"
£32.1m ÷ 12,823 ÷ 52=£48.14 per week.
Using the same proportion, the cost of paying for an extra 2100 state retirement pensioners who have been permanently resident for 10 or more years as per the Governments own commissioned Chislett Report
2100 x £48.14 x 52=£5,256,888 per year.
Giving the Manx Supplement to more pensioners should not be seen as a 'drain on our economy' because the money will be circulating in our local economy on the island.
The extra income will be subject to income tax.
It will be used to pay for living cost such as food, clothing, heating, fuel and consumer goods.
Much of this expenditure will be subject to VAT. And even if it is all spent on booze and cigarettes the government will benefit!
Savings will be made by Social Security who will not have to pay out Income Support because pensioners have insufficient income to live on.
In Tynwald on October 18th 2011, Treasury Minister Eddie Teare urged his colleagues to support the construction industry and keep workers in employment because every unemployed person costs the government £25,000 per year in terms of lost revenue through non-payment of National Insurance, lost taxation and Job Seeker's Allowance.
A similar argument could be made for paying the Manx Supplement. By not paying the Supplement to every pensioner who has lived on the island for 10 years, regardless of where they have paid their NI contributions, the IOM government is losing an opportunity to take in more income tax and more VAT.
A further way to offset the cost of bringing in a further group to receive the Pension Supplement would be to examine the rules regarding the payment to existing recipients.
The Government website only indicates the term "Ordinarily Resident".
There are not any checks made as to the time spent "off island" so basically anyone paying Income Tax as a resident in the Isle of Man is classed as "Ordinarily Resident".
http://www.gov.im/socialcare/security/useful.xml
Ordinarily Resident
A person is generally Ordinarily Resident in the country in which their main home is (i.e. where they have settled, even if they spend short periods away from that country from time to time).
Normally, if you are liable to pay Income Tax as a resident in the Isle of Man, then you will probably be considered to be Ordinarily Resident for Social Security purposes.