MPs 'will face pension changes'

29 June 2011 Last updated at 16:55 GMT MPs pay into a final salary pension scheme MPs should face "exactly the same changes" to their pensions as those imposed on public sector workers, David Cameron has said.

MPs have a funded final salary scheme, they pay a fixed contribution and the Exchequer is liable for the balance.

Commons Leader Sir George Young is expected to make a statement about MPs' pensions before the summer recess.

Four unions are to strike on Thursday over government proposals to change public sector pensions.

The government says the fact that people are living longer means the cost of public sector pensions has been "unsustainable" and changes have to be made.

'Contract'

They are being urged to pay more into their pensions, work for longer and accept a pension based on a "career average" salary, rather than a final salary.

MPs have their own scheme - the Parliamentary Contributory Pension Fund - a funded final salary scheme which, as of the end of March 2010, had 646 active members, 876 pensioners and 164 deferred pensioners.

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We are public sector workers as well and we should be subject to exactly the same changes we are asking others to take on”

End Quote David Cameron At prime minister's questions on Wednesday, Conservative MP Claire Perry told Mr Cameron there was a "contract between taxpayers and MPs" when it came to pensions.

She said: "Do you agree with me that we should be in the vanguard of reforming our own pensions so we can look our public sector constituents in the face?"

Mr Cameron - who in opposition described MPs' final salary scheme as "very generous" - replied: "I agree with you that we are public sector workers as well and we should be subject to exactly the same changes we are asking others to take on.

"So the increase in contributions should apply to the MPs' system, even though it is a system where we pay in quite a lot.

"We are saying right across the board that the increase in pensions contributions is right to create a healthier, long-term system."

Higher contributions

Lord Hutton's review of public sector pensions did not include MPs' arrangements but in the March budget Chancellor George Osborne said : "I believe this House should also recommend similar changes to the pensions of MPs."

MPs contribute either 11.9%, 7.9% or 5.9% of their ?65,738-a-year salaries - the normal retirement age is 65.

Continue reading the main story A funded final salary schemeNormal retirement age is 65, minimum age is 55MPs can contribute either 11.9%, 7.9% or 5.9% of their ?65,738-a-year salaryFrom April payments are now increased in line with the consumer prices indexAccrual is capped at two-thirds of an MP's final salaryThe coalition agreement included a commitment to consult with the Independent Parliamentary Standards Authority on "how to move away from the general final salary pension system"The Treasury has previously announced public sector staff will pay an average additional contribution of 3.2% of their salaries, phased in between 2012 and 2014.

The MPs' expenses watchdog Ipsa is due to take control of MPs' pensions from April 2012, subject to a parliamentary procedure to allow the change.

Sources have declined to say whether MPs' would have to make an additional 3.2% in contributions and whether any change would be made before or after Ipsa took control.

The 2008 valuation of the MPs' pension scheme found there was a ?51m deficit, and in July 2009, MPs agreed to increase their contribution rates and cap the amount the Exchequer contributes at 28.7%.

The Exchequer contribution to the MPs' scheme is higher than "employer contributions" to other public sector pension schemes including teachers, the NHS, civil service, police and fire service schemes, according to Lord Hutton's report on pensions.

In their coalition agreement, the Conservatives and Lib Dems agreed to "consult" with the Independent Parliamentary Standards Authority (Ipsa) about "how to move away from the generous final-salary pension system for MPs".

In opposition both the Lib Dems and Conservatives called for the scheme to be reformed - Gordon Brown also ordered a review, when he was prime minister, to halt the growing cost to the taxpayer.

Last July the Senior Salaries Review Body published its report, which recommended changing parliamentary pensions from a final salary to a career average scheme, increasing the retirement age from 65 to 68 and and standardising the accrual rate at 1/60th of salary.

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Government sticks to pension plan

20 June 2011 Last updated at 21:28 GMT Mr Duncan Smith opens the debate in the Commons on the Pensions Bill

The government will press ahead with plans to raise the state pension age for women but ministers have promised to look at "transitional" arrangements.

The coalition wants to raise the pension age for women from 60 to 65 by 2018 as a prelude to both female and male pension ages rising to 66 in 2020.

Critics say 330,000 women face working up to two years longer before retiring as a result of the proposals.

The coalition won a Commons vote on the plans by a majority of 70.

MPs voted to give a second reading to the Pensions Bill by 302 votes to 232.

During a Commons debate on the proposals, Work and Pensions Secretary Iain Duncan Smith insisted the coalition would not waver from its commitment to equalise the state pension age in 2018.

He told MPs: "Responsible government is not always easy government. It involves commitment, tough decisions and a willingness to stay the course.

But he said he was "willing to work to get this transition right" amid concerns over the "relatively small number of women" set to be disadvantaged.

'Tough decisions' Delaying the move to 66 until 2022 would cost the taxpayer ?10bn, which would be an "unfair financial burden borne disproportionately by the next generation", he added.

Last year, Chancellor George Osborne announced plans to accelerate the rate at which women's pension age would rise to equal that of men, currently 65.

The previous Labour government had agreed to achieve equalisation by April 2020, but the coalition's plans will see it achieved by November 2018.

Ministers will then use this extra time to raise the pension age to 66 for everyone.

The critics say many women affected by the proposals will have to wait between 18 months and two years longer than expected before they get their state pensions. They also say the changes are unfair as some women are being given as little as five years' notice of the changes.

More than 170 MPs have signed a Commons motion calling for a rethink over the plans, including both Conservative and Liberal Democrat backbenchers.

Lorely Burt, chair of the Lib Dem parliamentary party, said those affected would not have time to plan their retirement and many would be "financially a great deal worse off".

'Careers interrupted'

For Labour, shadow work and pensions secretary Liam Byrne said the government's plans had thrown the retirement plans of thousands of women into chaos.

Continue reading the main story Norman Smith Chief political correspondent, BBC Radio 4

The government finds itself in a bind over giving in to pressure to slow down the changes in pension age for women.

The problem is they've had to perform so many U-turns recently - health, sentencing, forests, etc - it is becoming a defining character of the coalition.

There must also be a concern that to backtrack over women's pensions would also be seen as a sign of weakness at a time when ministers are seeking to square up to the unions over public sector pensions.

And yet politically there is little sense in finding yourself lined up against well regarded age charities and further exacerbating tensions within the coalition - for a problem that only involves a comparatively small number of women.

It may be too that with the possible threat of legal action ministers have no option but to pause and re-think.

Certainly the government's critics are confident that whatever the government is saying now - it will eventually have to apply the handbrake.

"Women in their late 50s will have earned less over their lifetime, they have lower state pensions and private savings than men, many of them are unable to join a workplace pension and have interrupted careers to look after their family, many will have stood down from jobs on the understanding they would get that state pension early.

"What on earth are these women supposed to do with the measures set out in this Bill?"

James Gray was among Tory MPs to urge the coalition to think again.

"Going around the corridors and tea rooms in Westminster talking to Tories, Lib Dems and of course Labour MPs, they are saying this is an injustice being done to a small number of people," he said.

Meanwhile, Ros Altmann, director general of over-50s organisation Saga and a former government adviser on pensions, said ministers could face a costly legal challenge if they did not make changes.

"The current plans are unfair and may, indeed, be illegal in public law terms, since they clearly do not give women adequate notice of the large changes in pension age that they face."

Ahead of the debate, Prime Minister David Cameron appeared to get his own policy on pensions wrong in an interview with BBC Radio 2 - suggesting the retirement age will move to 66 in 2018.

The prime minister's official spokesman said Mr Cameron was merely saying the process towards 66 for men and women begins in 2018 but will be complete by 2020.

The Commons debate comes as union leaders are threatening industrial action over the government's proposals for public sector employees to work longer and pay more for less generous entitlements in retirement.

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Unison warns of pension strikes

18 June 2011 Last updated at 01:40 GMT Many Unison members work in the NHS The leader of Britain's biggest trade union says public sector workers could mount the biggest industrial action campaign since the General Strike.

Unison's Dave Prentis said the unions were prepared for "sustained and indefinite" strikes in protest at the government's pension plans.

The government said on Friday the pension deal on offer was the best the unions would get for many years.

Mr Prentis told The Guardian he still hoped to negotiate a settlement.

The Chief Secretary of the Treasury, Danny Alexander, said unions would make a "colossal mistake" if they rejected the coalition government's plan.

The BBC's political correspondent Ben Wright said: "Privately, talks are continuing between the trade unions and the Treasury about the government's proposals but publicly the two sides are locked in a war of words."

The government wants to reform public sector pensions - meaning a later retirement age and higher contributions for most workers - and claims the current pension system is unaffordable in the long-term.

Continue reading the main story Sector Employee contribution Pension age

*Depending on scheme. Source: IPSPC

Mr Alexander said the government was proposing public sector workers - bar the armed forces, police and fire service - would receive their occupational pension at the same time as the state pension in future.

Many can currently receive a full pension at 60. The state pension age is due to rise to 66 for both men and women by April 2020.

Teachers' unions in England and Wales have already voted to strike on 30 June to protect their pensions.

The strike by the National Union of Teachers (NUT) and the Association of Teachers and Lecturers (ATL) will disrupt thousands of schools.

Unison has 1.3 million members and they have not yet been balloted on industrial action.

Mr Prentis said if strikes did happen they would be the biggest since the General Strike of 1926 and, unlike the miners' strike in 1984/5, the unions would win.

Mr Alexander claimed the unions were "hell bent" on strikes

Unison has members working for local authorities, the NHS, colleges and the police.

Public sector workers are already facing heavy job cuts and a pay freeze.

Mr Prentis said: "I strongly believe that one day of industrial action will not change anyone's mind in government... we are prepared for rolling action over an indefinite period."

He also called on the Labour Party to support Unison's battle against the pension reforms.

Mr Prentis, whose union is affiliated to Labour, said: "We want our Labour Party to be the voice of opposition. We're worried that some of the senior people in the party still have to make statements as if they are in power, not opposition.

"If the Labour Party stays quiet that will be an issue," he added.

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MSP gives pension to charity

27 May 2011 Last updated at 12:05 GMT Alex Fergusson had served as presiding officer in the Scottish Parliament The former presiding officer of the Scottish Parliament, Alex Fergusson, is giving his pension to charity.

The Tory MSP, who has become the first former PO to return to Holyrood as an elected member, is entitled to about ?20,000 a year as a former post-holder.

But Mr Fergusson said he did not want to benefit from the pension while earning an MSP's salary.

He will donate the money to charities in his Galloway and West Dumfries constituency.

Explaining his decision, Mr Fergusson, who served in the politically-neutral job of presiding officer from 2007 to 2011, said: "I fully recognise the presiding officer pension was put in place with an expectation that the retiring presiding officer would be stepping down from politics.

"I also recognise that the rules have now been changed so that no presiding officer from now on will receive the presiding officer pension until they are in receipt of a normal MSP pension."

Mr Fergusson went on: "I see no point in the money sitting in a pension fund to the sole benefit of the fund managers, when it could be put to good use elsewhere."

The former farmer is currently working on the details with parliamentary officials in an effort to set up a "give-as-you-earn" scheme, to be administered by the Charities Aid Foundation.

The move will ensure the charities will also get the tax that would have been payable on the pension income.

Since the Scottish election, Mr Fergusson has made a return to front line party politics, becoming Scottish Tory rural affairs spokesman.

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