The Isle of Man is considering raising the state pension age to 74 for those born after 2011 in a review of national insurance.
In an Isle of Man Treasury consultation, published in September, the Isle of Man Government echoes Chancellor George Osborne by insisting roughly one-third of an individual’s life should be spent in retirement.
Based on Isle of Man Treasury longevity estimates this would create a state pension age of 74 for those born after 2011. The current state pension age on the island is 65.
The UK Government plans to increase the state pension age to 69 in the late 2040s with some pressing politicians to go further.
The Isle of Man review also recommended increasing the national insurance contributions to 45 years, up from current levels of 30.
A single tier state pension would also start at £180 from April 2016, instead of the UK level of £144, and workers would continue to pay NICs into retirement.
The Isle of Man would also uprate the state pension in line with earnings rather than the more generous triple lock in the rest of the UK.
The paper states: “We are specifically recommending that state pension age be linked to life expectancy and that under the projected period, i.e. until 2072, SPA is based on the principle of retirement lasting 30 per cent of working life because it is this calculation which will improve pensioner support ratios without reducing retirement length to unacceptable levels.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “We’re not quite in such radical territory yet here in the UK and there are important differences between The Isle of Man and the UK.
“In terms of demographics and the support ratio of workers to retired population, the challenge in the Isle of Man is more severe than in the rest of the UK.
“Nevertheless there are also some close parallels and the scale of radical reform called for by this review in the Isle of Man points to the kind of shift in state pension provision that we should expect over here in the longer term.”