USEFUL DEFINITIONS & TERMS EXPLAINED

The following explanations are a BASIC reference only and you should always contact us for more detailed and specific advice.

Age Addition (Retirement Pension)

This is an additional amount of money given to you if you are aged 80 or over. Download the rates here. Any Retirement Pension Premium you would otherwise be entitled to receive will be reduced by the amount of any age addition you receive.

All Work Test

The All Work Test is now referred to as the Personal Capability Assessment. It is essentially the same system apart from an added emphasis on helping and supporting people back to work.

When you have been incapacitated from work for 28 weeks, or from the start of your claim if you had no regular job when you became incapacitated from work, you will be assessed on how well you can carry out a range of work-related activities.

You are assessed via a questionnaire and a statement from your GP. You may also be examined by a doctor.

Visit the Incapacity Benefit pages and download the leaflet IB1 for more information about the Personal Capability Assessment and Incapacity Benefit.

Basic Pension

This is a component of the Retirement Pension payable to you based on the number of tax years throughout your working life for which you have satisfied the relevant contribution conditions - referred to as qualifying years

Download the rates here.

Category A, B, C And D Pensions

Retirement Pensions are categorised in the following ways:

Category A	Based on your own NI record
Category B	Based on your spouse's NI record and only available to married women, widows or widowers.
Category C	Only paid to those who were over pensionable age on 5 July 1948 and their spouses
Category D	Only paid to those over 80. Non-contributory.

Control of Employment Act

The Control of Employment Act means the Control of Employment Act 1975 (as amended) and the Control of Employment Regulations 1993 made under that Act. This legislation gives protection of employment for local workers by requiring that UK and other EU nationals must be issued with a permit in respect of their particular occupation before they are allowed to work on the Island. Persons from other countries are governed by different immigration laws as in the UK.

For more information on work permits, immigration and the definition of an Isle of Man worker - please visit the Department of Trade & Industry website.

Earnings Threshold

Employed earners (generally, employees) pay National Insurance contributions on the amount of their earnings which exceed the primary earnings threshold set for that tax year.

Employers pay National Insurance contributions for their employees on the amount of their employees' earnings exceeding the secondary earnings threshold for that tax year.

Download the rates here.

Graduated Retirement Benefit

This is a component of the Retirement Pension based on contributions paid between 6 April 1961 and 5 April 1975.

Download the rates here. Download leaflet NP46 which may also be useful.

Guaranteed Minimum Pension

Prior to 6th April 1997, in order for a salary related occupational pension scheme to contract out of SERPS, it had to promise to provide a Guaranteed Minimum Pension to those who were members of that pension scheme, which was broadly equivalent to what SERPS entitlement they would have been entitled to had they not contracted out of SERPS.

From 6^thApril 1997, such schemes have instead had to satisfy a scheme-based test (reference scheme test), as laid down out in the Pension Schemes Act 1993, which requires the scheme to provides benefits equivalent to or better than those of the reference scheme.

Isle of Man Worker

The ability of people to take up work is governed by the Control of Employment Acts which require anyone who is not an Isle of Man worker to have a permit before starting employment or self-employment in the Island.

Examples of people who would qualify as an Isle of Man worker are -

those born on the Island
those resident for at least five years
those having a Manx-born parent who has spent the first five years of their life on the Island.

If you qualify as an Isle of Man worker you may find you can claim certain benefits.

For more information on this, work permits and the relevant legislation visit the Department of Trade & Industry website.

Lower Earnings Limit

Whilst employed earners actually start paying National Insurance contributions once their earnings exceed the primary earnings threshold set for that tax year if their earnings reach the annual lower earnings limit they are treated as if they had paid contributions at 0% on any earnings they have up to the primary earnings threshold. Earnings on which contributions are paid at that zero rate count towards a person's entitlement to contributory benefits, such as Jobseeker's Allowance or Incapacity Benefit. This protects the National Insurance records of low-paid earners.

Download the rates here.

Maternity Allowance Threshold

This is an amount used to calculate entitlement to variable rate Maternity Allowance. That is, if your earnings are over 13 consecutive weeks in the 66 weeks preceding the Expected Week of Confinement are more than the Maternity Allowance Threshold, then the variable rate can be paid.

Variable rate Maternity Allowance is paid at one of 2 rates - 90% of average earnings or at Standard Rate, whichever is lower.

Download the rates here. Visit the Maternity Allowance page and download leaflet NI17A(IOM) which may also be useful.

National Insurance Credits

National Insurance credits are awarded to people's National Insurance records for periods during which they were in receipt of certain benefits and, in some cases, unable to work.

With some exceptions, such credits similarly count towards a person's entitlement to contributory benefits as contributions do.

You will get National Insurance Credits if you are claiming one of the following benefits:

Jobseeker's Allowance, Incapacity Benefit, Maternity Allowance, Carer's Allowance, Disability Working Allowance, Family Income Supplement

You will also get National Insurance Credits if you are on an approved training course, on jury service and you do not earn as much as the lower earnings limit that week, a man between the ages of 60 and 65 who is not liable to pay contributions, and if you are aged 16, 17 or 18 in that tax year.

The credits will give you the same entitlements as if you had paid contributions except for restrictions in respect of certain benefits, such as contribution-based Jobseeker's Allowance, Incapacity Benefit and the Pension Supplement.

You don't need to apply to have credits added to your record, these will be applied automatically.

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.

Qualifying Earnings Factor

This is the figure which represents the amount of earnings on which employed earners have paid contributions @ 0% or 10% or have been treated as paid where National Insurance credits have been awarded to those earners.

Qualifying Year

A Qualifying Year for benefit purposes is a year in which you have paid (or you were treated as having paid) National Insurance on earnings of 52 times the Lower Earnings Limit for that year. This means that in order to make a year qualify you must either -

earn 52 times the Lower Earnings Limit or more as an employed earner;
be credited with 52 Class 1 National Insurance Credits;
pay 52 flat rate Class 2 National Insurance Contributions as a self employed earner; or
pay 52 voluntary Class 3 National Insurance Contributions.

Reduced Earnings Allowance

This is an allowance which you can get if you had an accident at work or started to suffer from a disease as a result of your job before 1 October 1990. There are other conditions attached to entitlement such as, you must be permanently unable to follow your regular occupation. You can still claim it now if you can show you had a disease or accident before this date. You get an amount based on your current job or a job you could do compared to the job you previously worked on a regular basis. If your current earnings are less you can get an amount based on the difference.

If you feel you may be entitled to this - contact us for more advice.

SERPS (State Earnings Related Pension Scheme) - Additional Pension

Between 6 April 1978 and 5 April 2002 employed earners have built up entitlement to SERPS on earnings in excess of the prevailing lower earnings limit.

Download Leaflet NP46 for more details.

Severe Disablement Allowance (SDA)

SDA was payable to customers who had not paid sufficient National Insurance Contributions to qualify for Incapacity Benefit after they had been incapable of work for 28 weeks. It was abolished for all new claims with effect from 9th April 2001.

Unemployability Supplement

This is a supplement that is payable to you under the industrial injuries or war pensions scheme. You must be pensionable age and unable to work.

Upper Earnings Limit

Employed earners do not pay National Insurance contributions on any earnings they have above the upper earnings limit set for that tax year

However, their employers still have to pay contributions on their employees' earnings above the upper earnings limit.

Download the rates here.

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