Gold Plated Pensions No Longer On The Agenda For Mps

Gold plated pensions no longer on the agenda for MPS


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Gold plated pensions no longer on the agenda for MPS

Members of Parliament told that their gold plated pensions are to be cut from their list of benefits

MPs have been benefiting from a pension scheme which is far more generous than any scheme enjoyed by those in the public and private sector. This has been a major bone of contention for many years and now it appears that things are about to change. Whitehall spending cuts are to have a devastating effect on public servants across the country. MPs have always defended their huge pension benefits on the grounds that their basic salary is too low but will be dismayed by new plans to derive them of benefits they had grown accustomed to receiving.

A Senior Salaries Review Board are due to meet and discuss recommendations to the government which includes a proposal to increase the retirement age of MPs from 65 to 68. The Board is also expected to recommend changing the rate at which MPs can accrue benefits from one fortieth a year to one sixtieth. This is sure to infuriate Members of Parliament who justify their higher accrual rates on the grounds that their career is usually short. However, even if MPs were only to work for 15 years, their annual pension would come to a whopping £24,000 a year.

To put this in context, a worker in the private sector who is involved in a defined contribution scheme would need to have a pension pot of approximately £700,000 in order to enjoy the same level of pension benefits. Despite their grievances, MPs will be under intense pressure to accept the new measures. The new proposals would ensure that MPs would have the same accrual rate as other private sector workers.

Other changes include an alteration from a final salary scheme to an ‘average salary’ scheme whereby the MPs’ pension will be calculated according to their whole career in the House of Commons and they will have to pay 6% of their salary into the fund. Also, the final salary scheme will be linked to inflation with the scheme’s savings frozen.

A high ranking government source stated that the changes were immense and that certain aspects of accrued right could not be altered due to the law. The source continued by saying the new rules will bring MPs back into the real world and bring them to the same level as other private sector workers. Their pensions have long been seen as being too generous so this change is needed according to the source.

The SSRB were ordered to look into the matter last year by former Prime Minister Gordon Brown after an expenses scandal involving certain MPs broke. Members of Parliament are already upset about having to answer to a new expenses regime and MPs from all parties are complaining bitterly about this new blow to their finances.

Former Labour Work and Pensions Secretary, Lord Hutton, is involved with a new review which is to take a look at the issue of fair pay for public sector workers. His job is to look at the pay package of public sector workers but he will not be investigating the pensions or pay of MPs. Yet SSRB findings could guide Lord Hutton’s work when his commission examines them. His report is expected to be ready for consumption by the Spring.