Monday, June 20, 2011

MPs Pensions Gravy Train

Both Conservative and Liberal Democrat MPs had, before the General Election, emphasised their belief that MPs pensions were too generous and should be reformed. What has actually happened since the election? They raised the retirement age for women and men to 66. As a result 4.5 million 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.

What about the reforms to their own MP pensions? They 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. In 2008 the state contribute three times more to MPs pensions than its members did themselves.

MPs are still discussing 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. The hypocrisy of our MPs would appear to know no bounds.

Consider Cabinet Office minister, Francis Maude, who criticised the teachers. Maude has claimed £35,000 in mortgage interest payments on a London flat complete with 24-hour concierge and gym . This is close to a house he already owned. He also boasts a house in the country and one in France. His personal net wealth is estimated at £3m. Despite this, during a discussion on Newsnight on 22 October 2010 he argued that a 5% cut to his £65,738 salary was equal to the 'pain' suffered by Britain's poor. He worked in banking as Managing Director at Morgan Stanley from 1993 to 1997. He was also appointed a non-executive director of ASDA Group Plc in July 1992, and served as a director of Salomon Brothers from 1992 to 1993.

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