The Public Love the Idea of Means Testing and Cutting Benefits … But!

This news published by the Celtic League:

The Public Love the Idea of Means Testing and Cutting Benefits … But!

NEWS FROM THE CELTIC LEAGUE

THE PUBLIC LOVE THE IDEA OF MEANS TESTING AND CUTTING BENEFITS BUT!

On of the most radical proposals being pursued by the Manx government at present is a plan to reform Welfare and Pensions.

The Celtic League is an accredited NGO of the UN Economic and Social Committee (ECOSOC) some of our ‘fields of activity’ include ‘Social Policy, Employment and Poverty’. The DOI went along to one of the Manx government presentations on the issue and this is his report:

“The Manx Government’s decision to pursue this course of action is predicated on a report (CI65) which indicates that the Manx National Insurance fund will be severely depleted by the middle of the century to in effect leave more people drawing from it than contributing.

As the Manx Chief Minister (CM) told the Celtic League recently (see link) ‘to do nothing is not an option’:

https://www.celticleague.net/news/welfare-reform-doing-nothing-is-not-an...

The government have recently staged a series of public meetings (over a one week period) which according to news reports were attended by approximately 200 people.
The government are reported to be very pleased by this but insist (see CM’s comments above) there will be additional consultation.

The Celtic League had suggested an Island wide consultation on an issue of such importance. We suggested a ‘stripped-down’ version of the Gallup survey in the late 1980s on ‘Quality of Life’ which informed government policy in a range of areas for the next two decades (see link above).

Having made the observation on the consultation it seemed churlish not to attend and contribute to the government sessions so the DOI attended the final session at Peel which was attended by 47 people.

The government’s argument on the need for pension reform seemed soundly based. A series of surveys over recent years showed a diminishing N I fund by the middle of this century. This was illustrated by a graph which showed a marked decline predicted in the final survey.

The argument therefore was a cogent one ‘to protect pensions for future generations’ change was needed. This was the first problem with the process. Many attending the meeting were either retired (like my self) or close to it. Obviously the main group of younger Manx people 20-35 still need to be engaged in this debate particularly if the fourth session was as representative as the three which succeeded it.

Nonetheless the argument as pointed out above was persuasive. The only question I posed was had CI65 Consultants, who carried out the final Actuarial review of the fund used the same methodology as GAD (the United Kingdom Government Actuarial Department) who had undertaken the first three – there was no clear answer.

In respect of pensions the government team then moved on to outline plans for occupational pension plans covering the entire workforce. At the present most Manx public sector workers are covered by final salary schemes and this is an understandable bone of contention to those private sector workers who have no supplementary pension provision.

Government it was revealed would roll-out (subject to the reforms being given the green light) a pension for all workers and they would administer the scheme to simplify matters for private employers.

The new employee pension scheme would be funded by a 6% levy of employees and a 4% levy of employer’s reference was made to a similar situation in the Nordic countries.

Now the idea of the employee contributing more than the employer is the opposite of current PS schemes so I immediately queried this and also queried the Nordic comparator saying my understanding was this was may not be the case. Once again the government team had no clear answer.

I have since checked and it’s unclear if there is a standard Employee weighted contribution model of the type outlined in the Nordic countries;

In Finland the Employee Pension plan seems to be funded entirely by the Employer.
In Sweden the additional pension scheme still seems to be outside of State Administration.
In Iceland however their does seem to be an additional pension funded on a split basis which the employee contributes disproportionately to (I believe the current split is 4% and 2%).

The final segment of the welfare reform is to phase out benefits although again after query there did not seem to be clear evidence that the potential mid-century NI shortfall will be caused by ‘benefit draw off’ rather than age demographics. I queried this point – again no clarity.

Nonetheless the (Peel) snap sample (for the most part) gave overwhelming support to benefit reform. In this regard government here, as in the UK, is on a winner, The public love the idea of means testing and cutting benefits until that is they wake up one morning and find its their ‘means’ that are being ‘tested’ and their benefits that have gone!”

Obviously CL could consider pursuing this issue further obviously deep analysis of the CI 65 report and a cross reference with GAD would be helpful.

The impact of benefit changes also need to scrutinised. Such analysis is possibly to costly and time consuming for our organisation with its limited resources to consider. However given that restructuring the benefit system could have implications in relation to increased poverty then it may be possible for the Celtic League to interest a credible body such as the Rowntree Trust in funding a study, an approach to them could perhaps be considered at next months AGM in Dublin.

J B Moffatt (Mr)

Director of Information
Celtic League

07/03/15

(Please note that replies to correspondence received by the League and posted on CL News are usually scanned hard copies. Obviously every effort is made to ensure the scanning process is accurate but sometimes errors do occur).

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