Telegraph columnist Nina Montagu-Smith has called for the scrapping of Members of Parliament’s final salary pension scheme, which allows them to build up a pension of £8,000 pa after just 5 years in office. This equates the income an ordinary citizen could expect from a personal pension pot of around £250,000
Five years as an MP buys you five-fortieths of final salary (£64,000) in retirement. Their pension package is also inflation-proofed and includes a widows’ pension.
The Tories have promised to scrap defined benefit pensions for MPs if they win the next election but any such proposal will still have to be voted in by a majority of MPs because they get to set their own pay. They voted to improve the accrual of benefits from one-fiftieth to one-fortieth of final salary per year in office so it is difficult to imagine they will do away with their scheme altogether.
Public outrage over MPs’ expenses makes it likely we will see more than 200 new MPs take office next year, each entitled to immediate membership of the pension scheme; existing members will not be affected by any subsequent closure.
Average British citizens have no access to final salary-style pensions – 96 of the UK’s 100 largest listed companies have already closed such schemes to new employees – and have probably seen big losses in the pensions they have bothered to save for themselves, now they suffer the injustice of being asked to stump up for MPs as well.
Although many MPs will tell you that last year they approved a “cap” on Treasury contributions to the scheme, this cap only comes into effect if the scheme is fully funded – something most public sector pensions are not. And anyway, if the scheme was fully funded, what need would there be for a cap?
In conclusion, Nina Montagu-Smith asked, “when will we get more than just smoke and mirrors from those who claim to be representing our interests?”