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Senior Tory calls for MPs to move to DC pension scheme

Senior Conservative backbencher Harriett Baldwin is calling for a defined contribution pension scheme for MPs, rather than the proposed move to a career average scheme. 

MPs currently enjoy a final salary pension scheme but the Independent Parliamentary Standards Authority is proposing reforms.

In a report, published this week, it proposes a large hike in MPs’ salaries from £66,000 to £74,000 in 2015 with this then linked to future earnings.

It is also replacing the final salary pension scheme with a career average salary scheme.

It is estimated that the package of reforms to MPs’ pay and pensions will cost an extra £10m a year.

But MP for West Worcestershire Baldwin, who often speaks for the Conservatives on pensions matters, says the “incremental” change is not enough.

In her response to the Ipsa consultation, she says: “Ipsa has ignored the fact that the real world has changed since the Parliamentary Scheme was set up.

“These days, the majority of private sector pension schemes are on a defined contribution basis. Ipsa estimates that the current taxpayer contribution to the pension is worth 20.4 per cent of salary.

“Since Ipsa wants the scheme to cost 24.5 per cent of payroll, split 60/40 employer/employee, surely the sensible simplification would be to make a 14.7 per cent contribution to a defined contribution scheme for each MP? Surely this would be more modern and professional?”

Informed Choice managing director Martin Bamford says: ”I think all members of the public sector should move to DC pensions in the future, to bring them into line with the reality of the private sector. MPs would be a good place to start.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. A no brainer and leading by example. Would be nice if such a proposal had cross party support. Perhaps then they would realise the nonsensical nature of the lifetime allowance and its disincentive effects.

  2. Perhaps the government of the day could lead by example by pledging that from the next parliament future accruals will cease and will be be purely DC?

  3. Not a chance, Snouts in the trough, etc.

  4. @Sam – Perhaps we should start a party called the MP NEST pension party and like screaming Lord Such the head could change their name to Mr O.F Vipers.

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