The Treasury Minister believes that government pension schemes are now on a sustainable footing.

Dr Alex Allinson says that reforms made since 2017, which have reduced future benefits and increased members’ contributions, have had a positive effect and ‘significantly improved the long term sustainability of the schemes going forward’.

In a written reply to a Tynwald question from House of Keys Speaker Juan Watterson, Dr Allinson said that, based upon current projections of memberships and agreed assumptions, long term actuarial costs and expected future liabilities are falling slowly.

He said: ‘As such, Treasury is of the view that the schemes are now on a sustainable footing and funding of the ongoing shortfall is sufficiently covered from within the medium-term financial plan.’

Dr Allinson said the funding gap between the benefit expenditure and the contributions paid by employees and the employer was falling in real terms.

And he said it is projected that over the next 50 years - if all of the underlying assumptions are borne out, the cost of the pension schemes will be a lower proportion of the government’s overall budget than at present.

Future service costs - the total contribution rate required to fund the future cost of benefits - has continued to fall over the last 11 years and has dropped from 27.5% of pay in 2019 to 26.2% in 2022.

This was particularly the case, said Dr Allinson, with the ‘new entrant’ section where a majority of about 72% of scheme members have their membership.

Here the future service cost under the Government Unified Scheme of 23.4% of pay is now closer to being fully funded by contributions from the employer of 15% and from the employee of 7.5%.

The Public Service Pensions Authority has also introduced an additional method to manage the future sustainability of the schemes - cost sharing seeks to apportion any future cost increases or savings between scheme members (75%) and employers (25%).

This ensures any future shortfall is not met solely by the government, as it was in the past.

Dr Allinson said: ‘This will bring further sustainability to the current funding gap, that was a consequence of historic government policy, ensuring it can continue to be managed down in the long-term.’

He said the first cost sharing valuations have taken place and the results are currently being considered by the PSPA and Treasury.

Back in 2013, the public sector pensions liability stood at £2.1bn. But in 2020-21 it rose by more than £1bn to reach a record £4.8bn - although much of that increase was due to an actuarial loss.

Then thanks to actuarial gains, the liability dropped to £4.5m in 2021-22 and then fell sharply the following year to £2.9m.