Feathering the nest
The hypocrisy of our MPs would appear to know no bounds. Over the past few weeks they have rushed through changes to the state pension with undue haste, yet there has been a deafening silence over reforms to their own pension scheme.
Lest you should forget, both Conservative and Liberal Democrat MPs had, before the General Election, emphasised their belief that MPs pensions were too generous and should be reformed.
Some had argued for the abolition of their obscenely generous final salary scheme while others said it should be downgraded. But one thing most agreed on is that new members should not continue to benefit from the hugely taxpayer-subsidised gold plated scheme they had enjoyed for years.
So what has actually happened since the election? Well, they have moved swiftly to raise the retirement age for women and men to 66.
As a result 4.5m will have to wait longer than expected before they can pick up their state pension. Some women will receive their state pension almost two years later than they had expected.
This has caused considerable outrage among women in their late 50s who have little time to plan for the changes and whose personal pensions are written to age 60 or 65. They must make up an income shortfall of up to £10,000 from somewhere.
Meanwhile MPs have been strangely reticent over reforms to their own pensions which continue to reward them with up to one fortieth of their final salary for every year’s service if they contribute 11.9 per cent of their salary. This reduces to one fiftieth if they pay in 7.9 per cent and one sixtieth if they pay in 5.9 per cent.
An MP could work for just 15 years and build up a £24,000 pension, based on his salary of £65,738. A worker in the private sector would have to build up a pension pot of £700,000 over a lifetime to get the same income at age 65.
MPs’ spouses also receive generous benefits when their husband or wife dies – including a lump-sum worth four times their annual salary and an income of five eights of their pension.
Incidentally, in 2008 taxpayers paid £12m towards MPs’ pensions, three times more than MPs themselves contributed.
In the Budget, George Osborne confirmed the government had accepted recommendations in Lord Hutton’s report – published in March – as the blueprint for reform of MPs’ as well as public sector pensions. But this could leave reform moving at a snail’s pace.
But MPs are still chewing over recommendations made by the Senior Salaries Review Board last summer. This recommended moving from a final salary pension to a less generous one based on career average, and increasing MPs’ pension age from 65 to 68. It also said their pension should be built up more slowly.
By dilly-dallying over reforming their own pensions while taking swift and punitive measure over everyone else’s (including replacing the RPI link with CPI) MPs have revealed once again that whatever their political colours their prime cause is feathering their own nest.