(2) what recent estimate he has made of the (a) rate and (b) annual cost of employer contributions to the Parliamentary Contributory Pension Fund; and if he will make a statement.
The Parliamentary Contributory Pension Fund (PCPF) is a fully-funded pension scheme whose costs are met from Members' contributions, investment returns and an Exchequer contribution. The Government Actuary undertakes a triennial valuation in which he makes recommendations as to the necessary Exchequer contribution to the PCPF. This can rise or fall depending on factors such as predicted investment returns and longevity assumptions. The value of the Exchequer contributions since 1978-79 is as follows:
Financial year PCPF exchequer contribution rate (Percentage of Members' salaries) PCPF exchequer contribution rate (Percentage of office holders' salaries) PCPF exchequer contribution (£ million) 1978-79 18.5 18.5 4.07 in aggregate over a 3-year period 1979-80 16 16 See above 1980-81 16 16 See above 1981-82 16 16 5.55 in aggregate over a 3-year period 1982-83 16 16 See above 1983-84 20 14 See above 1984-85 20 14 8.21 in aggregate over a 3-year period 1985-86 20 14 See above 1986-87 20 14 See above 1987-88 19 13 6.65 in aggregate over a 3-year period 1988-89 19 13 See above 1989-90 4.4 4.4 See above 1990-91 4.4 4.4 0.88 1991-92 4.4 4.4 0.94 1992-93 6.8 6.8 1.52 1993-94 6.8 6.8 1.54 1994-95 6.8 6.8 1.59 1995-96 7.6 6.8 1.83 1996-97 9.6 6.8 2.75 1997-98 9.6 7.6 3.04 1998-99 7.6 6.8 2.49 1999-2000 7.5 7.5 2.56 2000-01 7.5 7.5 2.66 2001-02 7.5 7.5 2.86 2002-03 7.9 7.9 3.26 2003-04 24 24 9.82 2004-05 24 24 9.96 2005-06 24 24 10.17 Notes: 1. The above costs include contributions payable in respect of pensions provided for MPs, Ministers and office holders. 2. Contribution rates for 1978 to 1981 were based on a notional salary figure.
In the triennial valuation report laid before the House in March 2006, the Government Actuary's Department (GAD) calculated the Exchequer contribution should be 26.8 per cent. of pensionable pay from 2006-07 until 2020-21 and then 18.1 per cent. of pensionable pay thereafter. The estimated cost of contributions payable by the Exchequer for 2006-07 to 2008-09, the period until the next triennial valuation, is £11.9 million per annum. As at 31 March 2006 the membership of the PCPF was as follows:
Number Current members 668 Deferred members (former MPs, Ministers and office holders not yet in receipt of a pension) 228 Pensioners 908
(2) what the current rate of ill-health retirement is for the Parliamentary Contributory Pension Fund; and if he will make a statement.
The granting of early retirement is a matter for the Parliamentary Contributory Pension Fund (PCPF) trustees. A current Member who ceases to serve as an MP or Office Holder prior to age 65 and who applies to retire because of ill-health, is required to be examined by a medical practitioner appointed by the trustees to advise on whether his or her ill-health would prevent him or her from performing adequately the duties of a MP. The resulting medical report is considered by the trustees. A former MP or Office Holder may also apply to receive an ill-health pension, subject to confirming that he or she does not intend to seek election to the House or accept any future offer to serve as an Office Holder, and the medical practitioner confirming that the former member has retired from ‘gainful work’ as a direct consequence of ill-health.
The incidence of ill health retirements of current and former Members from the Fund between 1987 and 2005 is shown in the following table.
Statistics for each individual year are not available.
Period (as at 1 April each year) Total retirements Retirements paid early on ill health grounds Percentage paid early on ill health grounds 1987-1990 101 6 6 1990-93 104 5 5 1993-96 40 2 5 1996-99 168 8 5 1999-2002 99 6 6 2002-05 58 2 3
Serving Members who are awarded an ill-health pension are provided with a pension that they could have expected to receive had they served as an MP up to age 65. Former Members awarded an ill-health pension receive their pension built up to the date of retirement without actuarial reduction for early payment.
(2) what the (a) present and (b) future retirement age arrangements are for the Parliamentary Contributory Pension Fund.
The accrual rate for the Parliamentary Contributory Pension Fund (PCPF) is 1/40th of final salary for each year of service with an option to pay a lower contribution rate for 1/50th accrual. The normal retirement age in the PCPF is 65. There are no plans to change the normal retirement age.
Members who have served as an MP since 2 April 1991 can receive a pension on retirement before 65, subject to having completed 15 years as an MP. The pension is actuarially reduced to take account of early payment. Members elected before 4 November 2004 can also currently draw an early retirement pension without any reduction being applied for early payment if they are aged 60 or above and their combined age and service under the scheme totals 80 or more at date of retirement. In agreeing to phase out this retirement provision, the House decided in 2004 that only service up to 1 April 2009 or the next General Election, whichever was the later, would count towards the qualifying period for early retirement.
The Parliamentary Contributory Pension Fund (PCPF) is a fully funded pension scheme. Following the triennial actuarial valuation report laid before the House in March 2006 by the Government Actuary, the Exchequer contribution was increased from 1 April 2006 to the equivalent of 26.8 per cent. of Members’ salaries. There is no unfunded liability.