David Cameron says MPs will face same pension changes

 
MPs in the Commons MPs pay into a final salary pension scheme

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MPs should face "exactly the same changes" to their pensions as those imposed on public sector workers, David Cameron has said.

MPs have a funded final salary scheme, they pay a fixed contribution and the Exchequer is liable for the balance.

Commons Leader Sir George Young is expected to make a statement about MPs' pensions before the summer recess.

Four unions are to strike on Thursday over government proposals to change public sector pensions.

The government says the fact that people are living longer means the cost of public sector pensions has been "unsustainable" and changes have to be made.

'Contract'

They are being urged to pay more into their pensions, work for longer and accept a pension based on a "career average" salary, rather than a final salary.

MPs have their own scheme - the Parliamentary Contributory Pension Fund - a funded final salary scheme which, as of the end of March 2010, had 646 active members, 876 pensioners and 164 deferred pensioners.

Start Quote

We are public sector workers as well and we should be subject to exactly the same changes we are asking others to take on”

End Quote David Cameron

At prime minister's questions on Wednesday, Conservative MP Claire Perry told Mr Cameron there was a "contract between taxpayers and MPs" when it came to pensions.

She said: "Do you agree with me that we should be in the vanguard of reforming our own pensions so we can look our public sector constituents in the face?"

Mr Cameron - who in opposition described MPs' final salary scheme as "very generous" - replied: "I agree with you that we are public sector workers as well and we should be subject to exactly the same changes we are asking others to take on.

"So the increase in contributions should apply to the MPs' system, even though it is a system where we pay in quite a lot.

"We are saying right across the board that the increase in pensions contributions is right to create a healthier, long-term system."

Higher contributions

Lord Hutton's review of public sector pensions did not include MPs' arrangements but in the March budget Chancellor George Osborne said : "I believe this House should also recommend similar changes to the pensions of MPs."

MPs contribute either 11.9%, 7.9% or 5.9% of their £65,738-a-year salaries - the normal retirement age is 65.

MPs' pensions

  • A funded final salary scheme
  • Normal retirement age is 65, minimum age is 55
  • MPs can contribute either 11.9%, 7.9% or 5.9% of their £65,738-a-year salary
  • From April payments are now increased in line with the consumer prices index
  • Accrual is capped at two-thirds of an MP's final salary
  • The coalition agreement included a commitment to consult with the Independent Parliamentary Standards Authority on "how to move away from the general final salary pension system"

The Treasury has previously announced public sector staff will pay an average additional contribution of 3.2% of their salaries, phased in between 2012 and 2014.

The MPs' expenses watchdog Ipsa is due to take control of MPs' pensions from April 2012, subject to a parliamentary procedure to allow the change.

Sources have declined to say whether MPs' would have to make an additional 3.2% in contributions and whether any change would be made before or after Ipsa took control.

The 2008 valuation of the MPs' pension scheme found there was a £51m deficit, and in July 2009, MPs agreed to increase their contribution rates and cap the amount the Exchequer contributes at 28.7%.

The Exchequer contribution to the MPs' scheme is higher than "employer contributions" to other public sector pension schemes including teachers, the NHS, civil service, police and fire service schemes, according to Lord Hutton's report on pensions.

In their coalition agreement, the Conservatives and Lib Dems agreed to "consult" with the Independent Parliamentary Standards Authority (Ipsa) about "how to move away from the generous final-salary pension system for MPs".

In opposition both the Lib Dems and Conservatives called for the scheme to be reformed - Gordon Brown also ordered a review, when he was prime minister, to halt the growing cost to the taxpayer.

Last July the Senior Salaries Review Body published its report, which recommended changing parliamentary pensions from a final salary to a career average scheme, increasing the retirement age from 65 to 68 and and standardising the accrual rate at 1/60th of salary.

 

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  • rate this
    0

    Comment number 247.

    Do the planned reforms to MPs pensions include changes to their accrual rate? At 1/40th of final salary for every year worked, it is double the rate of most public sector schemes, which typically accrue at either 1/80th or 1/60th. For each year worked, an MPs pension is double or 1.5 times that of a public servant on identical pay, and 6 or 4.5 times that of one earning an average salary. .

  • rate this
    -2

    Comment number 246.

    Dear Mr Wonderful Reality

    It's an unfortunate reality that we need experts in a variety of fields which include pension provision. However a little knowledge whilst useful is not enough when dealing with experts in their relevant field

    I would also like to point out to you that my IQ is probably higher than yours; I was able to read adult English by the time I was six years of age.

  • rate this
    -1

    Comment number 245.

    236.Indefatigably Pusillanimous Ghosts
    13 Hours ago

    Without a doubt they are all criminals - little gangs of thugs in suits

    Don't trust
    ----------
    That's right they are all evil and never do anything right. Not like the rest of us who are all angels and would never stoop to such low levels. It must be hard to be perfect - perhaps you may enlighten us one day.

    .

  • rate this
    -1

    Comment number 244.

    242.Alan Hammond
    5 Hours ago
    This is a SMOKE SCREEN... Blah, blah etc.
    -------------
    I have no love for them either and believe that they should be hold to account as the public sector workers are. But what are they to do? If they do nothing you'll accuse them of avoiding the issue, if they say will do something you say it's a lie. Damed if they do and if they don't in your eyes - fair?

  • Comment number 243.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

Comments 5 of 247

 

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