Member News
MPs are set to lose their final salary pensions scheme following the recommendations of a public sector pay body.
The report from the Senior Salaries Review Body (SSRB) recommended that MPs basic pension be changed from "final-salary" to an amount based on their average career earnings.
In a statement issued today, the leader of the House of Commons, Sir George Young, said there was broad party political acceptance that the current final-salary pension scheme terms for MPs are "not sustainable".
Sir George indicated he hoped the SSRB's report would made available as evidence to the Independent Public Service Pension Commission, headed by Lord Hutton.
The former Labour work and pensions secretary is conducting a review into public sector pensions for the Coalition.
While Sir George acknowledged that the Hutton review had not been tasked to look at parliamentary pensions, he said he hoped any future pensions settlement would be informed by its proposals.
He said: “The government strongly believes decisions about the parliamentary scheme should be informed by the Commission’s recommendations in respect of public service pensions more broadly, and that the SSRB report should be available as evidence to the Commission.
“We will, therefore, await Lord Hutton’s recommendations on public service pensions. However, in the specific case of MPs, there is broad party political acceptance that the current final-salary pension scheme terms for Members of Parliament are not sustainable and that reform is needed. We anticipate that the current scheme for MPs will end.”
Responsibility for setting MPs pensions now rests with the Independent Parliamentary Standards Authority (Ipsa), rather than MPs themselves.
The SSRB report also recommends that MPs pension age be increased from 65 to 68 and standardising the accrual rate at 1/60th of salary per year of service and the member contribution rate at 5.5 per cent of pay.
Sir George said that taken together, the SSRB estimated that the package of reforms would reduce the underlying rate of Exchequer contribution to 10.5 per cent of payroll.
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