We’re All In This Together Part II

Are we?  Are we really all in this together?

I was reminded by a revered colleague that I had been remiss and missed an opportunity to criticise our wonderful government.  Well, I didn’t really miss the opportunity I just Tweeted a succession of facts and comments about the issue, without, for once, thinking of blogging it.

The issue is this.

In June 2011 David Cameron said this to the beleagured citizens of the United Kingdom, he said that MPs should face “exactly the same changes” to their pensions as those imposed on public sector workers.

MPs have a funded final salary scheme, they pay a fixed contribution and the Exchequer is liable for the balance.  What has happened to Public Sector Final Salary Pension Schemes I ask?  They have been closed, to new and existing members and replaced with what I believe is known as a Career Average Scheme.  So that’s treating MPs facing EXACTLY the same changes as public sector workers is it?

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.  Conservative MP Claire Perry told Mr Cameron there was a “contract between taxpayers and MPs” when it came to pensions.  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”

Quite unequivocal?  Yes?  Even I can understand those words.

Fast Forward to last week and we are confronted with the following headline –

MPs to get ‘holiday’ from paying more into their gold-plated pensions leaving the taxpayer to pick up £2million bill
The Treasury was expecting a 1.85 per cent rise in contributions to come into play this April – but IPSA, the MPs’ expenses watchdog, made the surprise announcement that the rise was being suspended.It means the taxpayer will be forced to plough even more money into MPs’ pensions to plug the gap, at a time when millions are having to tighten their belts to fund higher contributions towards their own pensions.

Almost all public sector workers are facing contribution rises of up to 6 per cent, and for staff in the private sector contribution rates are also going up.

Despite this, the Independent Parliamentary Standards Authority said it will put off any decisions on members’ contributions until after it has considered the whole issue of MPs’ pay and pensions in a report expected later this year.

The decision means that policemen will be paying more towards their pensions than MPs by 2015.

MPs’ pensions arrangements are among the most generous in the country. They contribute an average of 13.2 per cent of their £65,738 salaries into the schemes, which pay out after they reach 65.

In contrast, by 2015 policemen will be contributing 13.7 per cent towards their pensions.

MPs have to pay into their scheme for far fewer years than ordinary workers before getting a full pension. And they benefit from a higher  taxpayer contribution to their pensions than any other group in the public sector – almost 29 per cent compared with 14 per cent for teachers and nurses

Matthew Sinclair, chief executive of the TaxPayers’ Alliance, said: ‘MPs should be subject to the same pension reforms they’re imposing on the wider public sector. They say we’re all in it together, so it’s only fair that politicians contribute more to their hugely generous pension schemes to help repair our broken public finances.’

Ros Altmann, former pension adviser to the Treasury, said: ‘At a time when pensions are becoming more expensive to provide, it is rather unusual that MPs’ contributions are not increasing when they are everywhere else.’

IPSA said it deferred the rise so the contribution rate could be considered alongside other aspects as part of a wholesale review of pay and pensions.
In July 2010 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.
Well that’s alright then, a review of MPs pay and pensions, coupled with seemingly ignoring the advice of the Senior Salaries Review Body. Maybe they’ll have to pay more for longer to get less after the review.  After all, we are all in this together, Mr Cameron told us so.

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