Chief Minister Allan Bell MHK has confirmed that the Council of Ministers will soon be receiving a report on the ageing population – the issue he has described as ‘the biggest threat to the economic and social future of the Isle of Man.’
Mr Bell was speaking following a warning this week from Social Care Minister Chris Robertshaw MHK that the Island’s National Insurance Fund will start collapsing in little more than 20 years from now. The under-45s are facing a future without acceptable State pension provision, Mr Robertshaw told the Council of Ministers Community Meeting in Peel.
The Chief Minister said a working group, involving representatives from the private and third sectors as well as Government, had been examining the ageing population challenge and would produce an initial report to the Council of Ministers in the near future.
In his progress and priorities statement to Tynwald this month, Mr Bell identified ‘the demographic reality that our nation is growing older’ as the largest long-term issue facing the Island.
He added:
‘As in many nations, without greater economic expansion there will be fewer people of working age to pay for the needs of the elderly and the young.’
The Chief Minister said a national debate was needed on how to provide pensions, health care and social services in a viable manner. This would have to consider the role of population growth in maintaining the economy required.
He concluded:
‘Quite frankly, our current system is not sustainable within a low tax environment without a radical review of how we deliver services, raising charges or means-testing. None the less, we must also be mindful of the pressure of an increasing cost of living on household budgets.’
In the next twenty years the number of residents aged 65 and over is expected to grow by 75%, with the overall population growing by only 16%. This could mean the cost of health care for people over 80 at least doubling from roughly £25 million to more than £50 million.
In a presentation to the Community Meeting on Tuesday evening, Mr Robertshaw produced latest projections showing the National Insurance Fund starting to decline dramatically from around 2035 and running out completely by around 2050.
He explained that when the modern welfare state was created in the 1940s, life expectancy was 69, State pensions were paid for an average of 6.5 years, and there were six working age people to pay for each retired person.
Today life expectancy is 80, State pensions are paid on average for 15 years, and there are four people of working age per each retired person. The latter ratio is projected to reduce to two to one by 2050.
Mr Robertshaw also pointed out that on average total NI contributions paid in were less than the amount of pensions received, with a shortfall of £154,000 for a pensioner couple on maximum pension.
