Prime Minister Gordon Brown is scrapping some of his pension entitlements in a bid to set an example to MPs on salary and pensions.
Rather than receive a pension worth half his salary when he leaves office, Brown will now wait until he is 65, a move that could see him give up around £500,000 in entitlements.
The move follows calls from Tory leader David Cameron for MPs’ final-salary scheme to be closed to new entrants to end pension differences between Westminster and the private sector.
Brown made the announcement while calling on MPs to reject an independent review’s recommendation for them to get a 2.56 per cent pay rise. He is urging them to accept a 1.9 per cent pay rise to bring them in line with rises for police and nurses.
The senior salaries review body has recommended that all future Prime Ministers and Lord Chancellors should wait until 65 to receive their pensions and Brown says that he and Lord Chancellor Jack Straw would abide by these rules now.
Brown also backed the review body’s call for changes to the MPs’ pension scheme so taxpayers fund no more than 20 per cent of the scheme.
Aegon Scottish Equitable head of pensions development Rachel Vahey says: “This pledge by Brown throws into sharp relief exactly how generous are the pensions awarded to the public sector, in particular, MPs. This is only the beginning of the debate on public sector pensions. I am positive that the debate will continue.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “Gordon Brown gets a little gold star from me for doing this. He has done the right thing. Cameron’s calls for MPs’ final-salary scheme to be closed will put more pressure on the Government to review public sector pension provision.”