MPs’ Pensions -Part 2

The parliamentary scheme is positively mean compared to the bespoke provisions for the Prime Minister, the Speaker and the Lord Chancellor just one days service in any of these offices affords an immediate whole life annuity worth several millions to people in middle age.  After No 10 had initially wobbled on the question, David Cameron eventually followed Gordon Brown in pledging to refuse the perk.  But it remains on the statute book, so the restraint is voluntary.  Public sector workers outraged at the restrictions being placed on their pensions would dearly love to be asked to hold back as opposed to being told.

In the Guardian on the 15.7.2011 it was reported that MPs to fight attempts to make them pay more into their pension pots.  MPs who run the parliamentary pension scheme are set to defy a government order set out yesterday that they should face the same reforms to their pensions as other public sector workers, arguing that they are already the highest contributors in the public sector 11.9% of their salary, and saw a rise in their contributions only 2 years ago.  The leader of the Commons, Sir George Young told Parliament he would pass the issue to IPSA for assessment.  He said there is no case for MPs to be treated differently from other public servants, but Brian Donohoe MP who chairs the trustees of the pension scheme said they would argue for less than the suggested 5% increase.  “If people knew how much we pay compared with elsewhere I think we can make a case” he said.  “We have to set an example but we don’t have to capitulate to unreasonable demands.  My job is to represent members of the scheme.”

Conservative and Labour backbenchers cried foul after proposals were tabled in the commons to make them pay the same amount they expect other public sector workers to contribute to plug the public sector deficit.  MPs are debating a motion to transfer responsibility for MPs pensions to the IPSA, Conservative MP Christopher Chope and three others put down an amendment aimed at deleting a request for IPSA to increase contributions for honourable members from 1 April 2012 in line with changes in pension contributions rates for other public sector schemes.  Mr Chope was not against increasing MPs contribution but objected to the “inconsistency “ of the motion , which gave IPSA control of MPs pensions but then the Government was telling IPSA what to do.  Conservative backbencher Peter Bone who as also signed the amendment said the government needed to “butt out”.

What is the accrual rate?

The accrual rate is simply a bit of pensions jargon for how much you build up each year you work for your employer, it is usually expressed as a fraction of your final salary that you will get for each year you work.

A final salary related pension depends on three things – your final salary, how long you have worked for your employer and the accrual rate, for example if your final salary was £50,000 and the accrual rate is a generous 1/50th you would get a pension of £1000 a year for each year you had worked.   If your final salary was £25,000 and your accrual rate is 1/80th you would get a pension of £312.50 a year for each year you had worked.

Accrual rates are for Civil servants are either 1/80th or 1/60th; don’t forget MPs accrual rate at the moment is 1/40th.



It was reported on the 19th of October 2011 that MPs have agreed to plans to strip them of the power to decide their own pensions and hand responsibility to IPSA .  From the 1st April 2012 MPs pension contributions will rise in line with other public sector schemes, but there will be no change to the accrual rate.  A group of backbenchers tried to resist the changes attempting to retain a special deal for MPs compared to other public sector workers.

Shadow Leader of the Commons Angela Eagle (Lab) backed the changes but also urged ministers to have “meaningful negotiations with union representatives and recognise the dangers of going too fast and too fast on contribution rates”.



Squandered by David Craig,  2008 published by Constable

The Guardian 29th June 2011 and 15th July 2011

The Morning Star 18th October 2011

The Morning Star 19th October 2011

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