MPs get reprieve on cost of their pensions

Decision to drop increase in contributions despite rises for public sector workers met with accusations of ‘preferential treatment’

The MPs’ expenses body Ipsa has dropped the budgeted 1.85% increase in contributions.

Plans to increase how much MPs pay towards their pension scheme have been suspended this year despite rises for nearly all public sector workers.

The decision to drop the budgeted 1.85% increase in contributions was taken by the MPs’ expenses body Ipsa and is likely to face objections from the Treasury.

The decision will increase concerns that Ipsa is caving in to a campaign by MPs to maintain and improve their pay and perks while other public sector workers packages are cut further.

Nearly all employees of councils and central government, with the exception of members of the armed forces, are facing an increase in contributions to their pensions this year.

MPs have a funded final-salary scheme, into which they pay a fixed contribution. The increase of 1.85% began last April and was expected to be extended this April. They contribute either 13.75%, 9.75% and 7.75% of their £65,738 salaries into the schemes, which pay out after they reach 65.

Last February, the Senior Salaries Review Body recommended that MPs’ pensions contributions should rise by 2.4% to reflect the amount paid by ordinary public sector workers. But this was decreased to 1.85% following an intervention by Ipsa, an independent body that can decide how much MPs contribute in year on year increases.

The Treasury expected and budgeted for the same increase of 1.85% this year. But Ipsa decided to suspend the increase in expectation of an overhaul of MPs’ pay, pension and packages in the autumn. Dave Penman, the general secretary of the senior civil servants’ union, the FDA, said: “Our members are facing a contributions increase of 6% at the same time as facing a two-year pay freeze and a 1% cap in pay increases. They would welcome the same review of pay and pensions and terms and conditions that MPs will be enjoying. This is not about equality of misery. It is about fairness and addressing concerns that our members have about their pay and conditions.”

Mark Serwotka, of the Public and Commercial Services Union, said the decision was fundamentally unfair and would provoke a backlash from civil servants. “Rank and file civil servants will wonder what makes MPs so special that they deserve preferential treatment. This will fuel the sense that hard-working public servants are being punished while politicians and those that caused our economy to collapse are being let off the hook,” he said.

A spokesman for Ipsa said that the body made the decision because it is involved in a fundamental review of MPs’ pension and pay.

“There is often a heavy focus on contribution rates, but that is only part of it – you also need to consider how much the state pays in and at what level MPs accrue benefits -it’s crucial that we look at those elements too.

“MPs contribute 13.75% – quite a high contribution rate – but their pension is generous in terms of taxpayer contribution and the rate at which they accrue benefits. There is little value in us tinkering with one element in isolation, we need to look at the full package. That is what we are doing at the moment and we will consult the public this spring and unveil revised pay and pensions for MPs in the autumn.”

• This article was amended on 27 February 2013. The original gave last year’s figures for MPs’ contributions to their pension schemes, instead of this year’s.

MPs get reprieve on cost of their pensions

The Police Federation comments: -

Steve White, Vice-Chair, PFEW, says:

“Officers around the country will be livid and dismayed that having been promised fair treatment by this government, clearly MPs appear to be treated more favourably than others.

“This government is ruthlessly pursuing reforms to the public sector at breakneck speed and yet seems content for a review of their own pay and conditions to happen at a leisurely pace.”

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See also:- MPs’ expenses – what you’ve discovered

An A-Z guide to the most interesting claims made by MPs for their second homes from April 2008-June 2009

• Sinn Féin’s Gerry Adams and Martin McGuinness both claimed £21,600 each – £1,800 a month – in mortgage interest payments on a two-bedroom London flat in 2008-09. All Sinn Féin MPs refuse to take their seats at Westminster because they would be required to swear an oath of allegiance to the Queen. The three other Sinn Féin MPs – Pat Doherty, Michelle Gildernew and Conor Murphy – also claimed £1,800 per month each for a townhouse they share.

• Adam Afriyie, Conservative MP for Windsor, and Richard Benyon, Conservative MP for Newbury, claimed nothing.