Defined Contributions (DC) Arrangement
The Isle of Man Government Defined Contribution Arrangement has been established for IOM public sector employees via the IOM Government DC Policy. The Arrangement will be available to eligible new employees under participating employers from 1 June 2023.
It is the Isle of Man Government Group Personal Pension Scheme and is managed and administered by a third party Aviva. For ease of reference it is called it the DC Arrangement.
Please note that your employer may not be participating and as such, you will not be able to join the DC Arrangement.
Your employer will advise you if you are eligible to consider the DC Arrangement as an alternative pension saving choice.
Participating Employers are listed below:
- Public Services Commission
- Public Sector Pensions Authority
- Manx Utilities Authority
- Gambling Supervision Commission
- Department of Home Affairs – Police and Fire
- Manx Care*
*Manx Care employees are only eligible to join the DC Arrangement starting from 1 September 2023.
What is the DC Arrangement?
Unlike public sector defined benefit schemes, employees can choose how much they wish to contribute. The money that is paid in, by both you and your Employer, builds up a pension fund that can be invested in the range of funds offered by Aviva. How quickly the fund grows will depend on what is paid in and how well the investments perform. From age 55, the fund can be used to draw down an income, to cash in or to purchase a separate individual annuity. This can be done whether or not the employee stops work.
The fund built up in this arrangement is not guaranteed in any way by the Isle of Man Government. The amount of pension fund will depend on the money that is invested and the performance of the investment funds. It is important to note that the value of the fund can go up as well as down.
Eligible employees will be given 2 months to decide which pension arrangement they want to choose. All eligible employees will be given support and help in making their pension decision and must take the advice of an Independent Financial Adviser (IFA).
The choice to join The Isle of Man Government Defined Contribution Arrangement is a one-time offer and only available during the first 2 months from starting employment.
Only employees who meet the criteria of a new employee as defined in the DC Policy will be offered the choice. Please see the FAQs for further information.
Independent Financial Advisers
Joining the DC arrangement is entirely voluntary. This may be a difficult decision, taking in many unknown factors and it is imperative that employees take professional advice to understand the potential drawbacks and advantages of both pension arrangements and help them make an informed decision.
To help employees make this decision, your employer has engaged the services of MAC Financial Ltd (MAC). MAC Financial Ltd are part of the MAC Group and are based in Douglas, Isle of Man.
The appointment of MAC does not limit employees taking advice from another financial adviser. However, the cost for this will need to be met in full by the employee.
MAC has been appointed to advise and make a recommendation to employees who may consider the DC Arrangement as an alternative to the DB Schemes. The advice and recommendations made by MAC will be based on the personal information provided by the employee in the IFA Referral Form provided by your employer.
This initial advice, is provided for the purpose of assisting new employees in deciding to join either the DC Arrangement or the DB Scheme and will be free of charge and paid for by the employer**. With the exception of the annual policy review, any subsequent advice from MAC, or another IFA must be paid for by the employee.
** Employees will pay an ongoing annual administration cost in the DC Arrangement, which will be automatically deducted from their fund by Aviva, and may also be required to pay further fees at retirement - see the FAQ’s for more information.
All eligible employees who wish consider the DC Arrangement must complete and return the IFA Referral Form to their Employer. The Employer will note the interest in the DC Arrangement and send the IFA Referral Form to MAC. MAC will make contact with the employee, prepare the comparison quotes and arrange for a meeting with the employee to discuss the options and provide advice and a recommendation.
Choosing your pension scheme - Defined Benefit or Defined Contribution?
Only first time public sector employees may be eligible to join the new IOM Defined Contribution Arrangement (DC Arrangement).
When you start your employment, your employer will automatically enrol you into one of the Unified, Teachers or Police schemes (the DB Schemes). However, if your Employer is offering the DC Arrangement, it will also ask you to expressly register your interest to join the DC Arrangement. You can do this by completing the IFA Referral Form (which will be enclosed with your employment offer information) and return this to your employer.
You will be referred to MAC to take advice and you will have 2 months from starting your employment to decide if you wish to join the DC.
If you DON’T choose DC, you will remain defaulted in the DB Scheme relevant to your employment.
If you DO choose DC, MAC will guide you through the contracting with Aviva and advise your Employer. Your Employer will remove you from the DB Scheme and your contributions will be refunded to you.
If you take up an additional post to your current post, having already been given the prior opportunity to choose either the DC or DB Scheme, then you will not be offered another choice and will stay pensionable in whatever pension savings vehicle is chosen as outset. To ensure that employees get the best outcomes from their long-term pension savings, it is imperative for employees to keep continuity of membership in their chosen arrangement.
MAC and Aviva charges - the cost of the DC Arrangements
The DC Arrangement includes an Annual Management Charge (AMC) of 0.95% of the value of the fund which is paid to MAC and Aviva to cover the cost of the policy administration and an annual review. The AMC is shared between MAC 0.46% and Aviva 0.49% and is automatically deducted from the fund value by Aviva.
Depending on the employee choice at retirement, there may be an ongoing administration charge for choosing the drawdown option**. Detailed information on the charges associated with the DC Arrangement will be explained to employees by MAC or (employees own adviser).
** See the FAQ on Retirement Options for more information.
Further information is available on the Aviva website.
With the exception of charges for the implementation of a court order associated with Divorce or Dissolution or for multiple estimates, there are no administration charges made to employees who join the DB Schemes. The charges associated with the DB Schemes are set out in the Public Sector Pensions Authority Administration (Fees) Order 2021.