It is understood the Government has been given UK legal advice that its approach to the major Civil Service Pension scheme has been flawed.

The repercussions could be extensive and expensive.

Business Editor John Moss reports:

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This is a complicated matter that dates back to changes in the UK Principal Civil Service Pension Scheme in 2002. The argument locally was over whether changes to the UK scheme applied automatically to the Manx version. If it did then there would have to be a change in the amount of contributions for new staff from 1.5% to 3.5%.

Existing staff would remain where they are by paying an additional 2% to gain additional benefits. Staff should have been offered choices.

The Civil Service Commision was given legal advice by the Attorney General in 2005 which confirmed that the 2002 changes had to be introduced. Despite that, Chairman of the CSC, MHK John Houghton (pictured) tried to get Tynwald to approve schemes to bring in retrospective changes but that was blocked.

Now Queens Council has advised that the Island should have automatically brought in the amendments passed in the UK.

This means the Government will now have to check back to 2002 and deal with all the ramifications. And that is unlikely to be a cheap exercise.