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Morning Line: when will MPs lead by example on pensions?
The Hutton review of public sector pensions says its recommendations will influence what happens to MPs’ overly generous retirement scheme. The only question is when?
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The Hutton review of public sector pensions says its recommendations will influence what happens to MPs’ overly generous retirement scheme. The only question is when?
The response of several readers to my article yesterday on the Hutton commission into public service pensions was to ask: what about MPs?
Matt Smith wrote: ‘What about the most generous pension of all, that available to MPs. In the interests of fairness there must surely be a cut here!!’
Ian Cowie at the Daily Telegraph appears to agree, with the headline ‘Public sector pensions: MPs must lead by example’ on his account of the interim report and reaction to its findings.
It is a really good question.
The answer is a mix of good and bad news for citizens who want their parliamentary representatives to share the pain of Austerity Britain. It turns out the parliamentary pension scheme is, like those of the BBC, Bank of England and Royal Mail, outside the scope of the review of the Independent Public Service Pensions Commission.
Although in the public sector, ‘these schemes are administered by trustees, rather than being authorised by statute and the organisation concerned sets the scheme’s rules.’
The report adds, ‘Nor does the review cover the pension fund for Members of Parliament, although the government has stated that it believes that decisions about the parliamentary scheme should be informed by the commission’s final recommendations.’
What does ‘informed’ mean? If MPs are not subject to the same contribution increases, lower accrual rates and raised retirement ages that look set to be imposed on the rest of the public sector, there will be trouble.
As the Principle First blog site explains, the MPs’ final salary scheme is one of the most generous available in the public sector:
- Providing pension income of up to £37,240 retiring after 20 years’ service
- Requiring a taxpayer-funded contribution of 20% of their £65,000 salary
- Benefiting from a generous 1/40th accrual rate which gives MPs a pension of half their salary after 20 years’s service
The Senior Salaries Review Body has already recommended that the contribution rate should be cut to 10.5% and the accrual rate moved to a 60th of salary, which would reduce the pension to a more conventional third of final salary. Still a good deal.
The tide is clearly moving in favour of reform. The report also reveals that the Parliamentary Pension Scheme is subject to the ‘cap and share’ agreements introduced five years ago to more equally divide the rising costs of the main public sector schemes between employers / tax payers and employees.
After the expenses scandal, it really can't happen soon enough. MPs should take Hutton's interim recommendations and apply them to their arrangements as soon as possible in order to avoid the politics of envy turning really ugly.
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15 comments so far. Why not have your say?
PensionMan
Oct 08, 2010 at 13:29
And while they are at it scrap the grace and favour pensions that the PM, Speaker of the House and the Lord Chancellor get!
report thisMaverick
Oct 08, 2010 at 13:42
When pigs, who currently have their noses in the trough, fly?
report thissnoekie
Oct 08, 2010 at 14:03
These turkeys, MPs will not vote for Xmas (for taxpayers) to come before the next administration gets into power and will continue to postpone, and if the other lot, they will stall and prevaricate until pigs grow wings.
report thisAnthony Tinslay
Oct 08, 2010 at 15:00
I have little doubt but that Cameron will force through strong conditions for MP's Pensions in the future on a basis nowhere near as beneficial as at present. The only way of telling whether he goes far enough is to see how many nominations there are for election to Parliament in the future. Assumed prestige is great but in reality many candidates might think twice if they cannot see enough gravy.
report thisRose G
Oct 08, 2010 at 15:07
While they are at it with the axe, get the MEPs & their very generous remunerations into the line of fire!
I bet they will find some mechanism that prevents their own perks from disappearing - that is why they choose to govern, so they can exempt themselves from the laws they impose on us.
Trust me, there is going to be a bloody revolution, wait till the trade unions get in on the act!
The likes of B Crow will be regarded as milk maidens, when faced with the really, truly disgusted TU leaders - Serwotka, here he comes!!!
report thisGraham Barlow
Oct 08, 2010 at 16:18
If you are looking for a good example leading the Country into restraint on Public Service pensions, then you are wasting your time. As demonstrated over the last Parliament the House is largely populated by Careerist pocket liners. Some are even reaching the Courts for criminal deception. Their tax avoidance has reached state of the art, and their claims for expenses are couched in greed ,and when denied they become abusive in the extreme to the staff. Nothing will happen to their Gold plated superannuation, even if somebody had the Temerity to suggest it. All the time they are allowed to vote themselves Tax payers money they will go on and on helping themselves.
report thisjohn
Oct 08, 2010 at 16:36
It seems to me that David Cameron is just another Tony Blair - but better at the spin. All he has done to date is go back on every Conservative pre election pledge Yet again tax middle income earners are being taxed by stealth . 1st through child benefits ( that he said pre election he would not scrap) then lately through taxing our pensions by reducing the amount of controbutions we can make.
As was the case with Labour it looks like the Con Dems have neither the will for public service cuts or the courage to implement them in the light of probable severe union unrest. Consequently they are taking the easy way out ( as all politicians do ) of increasing taxes. How I miss Margaret Thatcher.
report thisKeith Snell
Oct 08, 2010 at 18:10
I have already commented on similar subjects that we have become a nation of wingers. I will join wingers unite if MPs pensions do not follow the precedent of civil service pensions if indeed they do follow Huttons recomendations.
report thisNigel Snowden
Oct 08, 2010 at 18:42
Everyone speaking with the same voice, however I am led to believe that the rules on MP's length of pensionable servise has quitely been changed very recently from 40 years to 15 !!, is this is correct ? if it is it's brilliant reform at it's best, ie MP's looking after there own interests again.- REMEMBER WERE ALL IN THIS TOGETHER.
They have also found a way ( for the older MP) of still travelling First Class by using there Snr railcards which means the amount they save falls in - line ( sorry about the pun) with the highest amount that is allowable, which I think is £ 190 ?. shame we no longer have railway cattle trucks,they could all be put together with the peace and quiet they say they reqiure,the last time I walked through the first class carriage,the local MP was fast asleep with a copy of the Time's newspaper on the table which he had been reading,and before anyone starts to think the poor chap must have been in the house working late, this was 11 30 am on the morning train to Kings Cross !! - I rest my case.
All these so call protected pension arrangements need to be scrapped forwith,you lead by example not take advantage of a corrupt scheme, bring these people into the real world.
report thisdave sullivan
Oct 08, 2010 at 21:26
All MPs are a buch of theiving gits - but then some animals are more equal than others!
Let the many take the pain whilst the few enjoy the gain!!
report thisGodfrey Billy
Oct 09, 2010 at 06:48
All MPs look after themselves irrespective of colour when it comes to pensiopns and salary increase. When prime ministers spout to the public it is just for public consumption, the real decision makers are the mps themselves and with a small or no majority there is little Cameron can do, otherwise he will have a revolt and loose power. With his love of power including Clegg they will do anything to stay in power and use the silly excuse of saying we are doing for the country to cut the deficit down. There is no leader strong enough yet to tackle the mps generous pension. T.Blair with his vast majority in the first election should have done a lot but missed the opportunity because of his love of power and for me he failed and Cameron/Clegg are no difference. We are not all in this together, Cameron, boy George and clegg should have started with MPs, senior civil servants, high earners and the public will warm to their actions and welcome on actions taken on the middle classes and the working class to cut the deficit.
report thisGraham Barlow
Oct 09, 2010 at 20:44
It seems to me that many do not realise the game that is being played out. Cameron or anyone else for that matter cannot afford to alienate all those he relies upon to stay in power. The only people who will suffer in all this is the ordinary Tax payer. He is scared stiff to Rock THE BOAT in Parliament. Just like Blair?Brown keeping the public sector sweet and ever expanding. It goes under the pseudonymn of PATRONAGE. Look it up it is something akin to BRIBERY.
report thisJerry Latham
Oct 10, 2010 at 15:48
"We are all in this together"! If this has any credibility lts essential that parliamentary pension schemes comes into line with the vast number of other schemes that have closed their final salary schemes and have switched to a money purchase scheme. Within that a taxpayer contribution of say 8% of salary would be acceptable. Anything else and we can hardly be expected to have anything but a continuing contempt for these people.
report thisDavid booth
Oct 11, 2010 at 08:24
Whenever the press refer to a group of MPs or MEPs why not just show the photograph at the top of this article? Isn't a picture worth a 1000 words?
report thisRose G
Oct 11, 2010 at 12:01
While they are targeting public sector workers, they should line up before the public sector workers, to set a good example.
Change the nature of politics: ie no late sitting, ergo, you will not have to pay them extra for travel expenses, or 2nd home expenses either - very few of the public sector workers get travel allowance, none of them get the perks for the duck pond, or flipping of second home - these are all measures they should undertake before they target the ordinary public sector worker!
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