UK - Isle of Man Reciprocal Social Security Agreement

The Isle of Man (IoM) is not part of the UK. It is a Crown dependency with its own government and legislature. The Island has its own social security system and legislation, including a contributory National Insurance (NI) scheme that is broadly similar to the UK's, but is outside the co-ordinating scope of the European Community's social security legislation. Effectively Tynwald, the Island's Government, generally adapts and applies Great Britain (GB) Social Security legislation.

IoM NI Contributions and benefit rates are generally set at the same rates as the UK's, but Tynwald is under no obligation to adapt and adopt all measures introduced in the UK and is free to introduce its own particular measures, such as a Pension Supplement that is currently based on a minimum of 10 years' contributions paid to the IoM Scheme.

The present agreement, as it applies in GB, is set out in Schedule 1 to the Social Security (Isle of Man) Order 1977 SI No.2150. The agreement updated and replaced an earlier similar agreement dating back to 1948, when the UK systems of National Insurance were introduced. It effectively achieves reciprocity by co-ordinating the three NI Schemes in operation in GB, Northern Ireland and the IoM as though they were a single system. As in the UK, people born or living and working on the Island are registered with a National Insurance (NI) Number. People moving between the territories retain their NI numbers.

However, the arrangements with the IoM differ from those that apply between GB and Northern Ireland, in that the territory where the person resides is responsible for the maintenance of the person's NI account. For people moving between the UK and the IoM, contributions paid in the IoM (including both the employee's and employer's share of any Class 1 contributions) are transferred back to the UK and credited to the NI account held by the UK. Similarly, for people moving between the IoM and the UK contributions paid in the UK are transferred back to the IoM for crediting to the NI account held in the IoM. There is a financial adjustment covering these arrangements. Once a person has been in the other territory for a complete tax year, the NI account is transferred to the other territory. Each territory's NI Fund retains responsibility for the benefits and pensions derived from contributions previously received by it in respect of former residents. Contribution based short-term benefits (e.g. for periods of unemployment, incapacity, maternity etc.) are paid by the territory where the claim is made, based on the record of NICs paid to the other's NI Fund as necessary. There is a financial adjustment covering these payments of benefit, which are in effect made on an agency basis for the other territory.

For State Retirement Pension (SP) and Bereavement Benefit purposes, a claim is determined by the administration of the territory where it is made and any award is based on all NICs paid during the person's working life, irrespective of where they were paid. There are financial adjustments, drawn up under the existing reciprocal agreement, that ensure that each NI Fund bears the respective proportionate cost of the pension. So, for example, for a pensioner living in the IoM who had 30 reckonable years under the UK scheme and a further ten paid into the Manx system, the IoM would pay SP based on 40 reckonable years of contributions and recover 75% of the amount in payment from the UK.

DWP, Joint International Unit, January 2010

http://www.dwp.gov.uk/docs/a10-3855.pdf

This system of “split-liability” has operated since April 1978. Prior to that date, when contributors' NI records were transferred, or when pensioners and widows moved from one territory to the other, there was a system of capital transfer value payments between the NI Funds calculated on an actuarial basis.