Controversy continues to rage in the Isle of Man regarding the Manx Pension Supplement. Put briefly, this is denied to most residents from the UK, but is paid to people with 10 years or more of NHI contributions to the Manx government. It amounts to an extra 50% on top of the standard pension. It is thought by many, to divide and discriminate unfairly, and in a way not to be expected in a modern democratic society. We all contribute financially and socially to the Island, and pay the same prices for goods and services.
But that is not the whole story. Pensioners from the UK lose three pension-linked benefits by coming here. First, the Winter Fuel Allowance. This was introduced in the UK to help pensioners when VAT was imposed on fuel. In the IOM we have the VAT but not the allowance. Ironically, it would still be paid to us had we gone to sunny Spain. Second, the new Pension Credits are lost by coming here, and third, there is no equivalent of Council Tax Rebate. No rate rebates here despite the now rapidly escalating bills.
At the time of writing we learn that our MHK's have voted themselves a rise of 20%. Average earnings in the Island have risen by 7.2%. But the Island's pensioners are expected to be content with 2.8%.
Both in the Island and in the UK,the number one complaint must be that pensions do not keep up with prices. They are linked to some mythical government figure known as the RPI, or "retail price index". This seems to rise annually by about between 1% and 3%. But many of us remember how prices have multiplied by 50 in 50 years, and by 100 in in 60 years. This is the equivalent of a sustained annual inflation rate of as much as 8%. Which planet do the government financial experts live on? Decimal currency and metrication may hinder price comparisons, but we can still do arithmetic!
RPI figures are distorted by including prices of all the latest gadgets, which start high and fall quickly. and are not generally part of a pensioner's budget. They also disregard the higher proportion of a pensioner's income spent on essentials like fuel and housing costs that rise continually.
The only fair solution is to restore the link between pensions nd earnings. With today's pensions paid from today's income tax and national insurance contributions, there should be no problem. Let's do it. The slogan should be "RIP for the RPI".
National Service has caused severe disruption to the education and careers of many of today's pensioners. Consequent delays in starting pensionable employment mean less money now. Throughout the fifties, sixties and seventies, we paid high rates of income tax to maintain the pensions and benefits of our predecessors. To pay for today's income tax cuts, we now have to suffer low pensions, high council tax (or rates), and more VAT.
Perhaps the most iniquitous tax in modern times is VAT on domestic fuel. Pensioners are twice penalized by this. First, they have to spend a greater proportion of their limited income on fuel. And second, they do not have the benefit of a heated workplace during the day. This tax should be repealed.
It is time for the complete revision of means tested benefits. There are those who have contributed to occupational pension schemes, only to find that their efforts have disqualified them from benefits they would otherwise have received. Does it send the right message to today's earners? Would it not be better for those benefits to be graduated, so that there is always some incentive to help oneself?
Today's pension rises are swamped by council tax (or rates) rises, leaving us worse off than before. If trends continue, the whole pension may soon be clawed back in local taxes. If these are not revised to reflect ability to pay, there will be severe poverty and social unrest. Another poll tax?