In the Spending Review 2010, the Government announced their intention to increase employee contributions in public service pension schemes. This followed on from Lord Hutton’s interim report on public service pensions1, which concluded that there was a clear rationale for public servants to make a greater contribution if their pensions were to remain fair to taxpayers and employees and affordable for the country.
The ministerial pension scheme was not covered by Lord Hutton’s recommendations, but I consider it appropriate that its members face similar changes.
Last year, I consulted on proposals to make increases to member contributions in 2012-13 and this consultation concluded on 13 January. Having given careful consideration to the responses, I have decided to implement these proposals effective from 1 April 2012.
This will mean that:
Secretaries of State, the Leader of the Opposition in the Commons and Speaker in the House of Lords will pay an additional 2.4 percentage points of pay;
Ministers of State, the Government Chief Whip, the Leader of the Opposition in the Lords, the Chairman of Committees of the House of Lords and the Deputy Chairman of Committees of the House of Lords will pay an additional 1.6 percentage points of pay; and
Parliamentary Under-Secretaries, the Government Whips and Opposition Whips will pay an additional one percentage point of pay.
In line with other public service schemes, a further consultation will take place on the contribution increases for members of the ministerial pension scheme in 2013-14 and 2014-15. Before these increases are implemented, I will consider any evidence of opt-outs from the scheme in line with the Government’s commitment given on 20 December by the Chief Secretary to the Treasury.
The increased contributions will deliver an average of 1.7% percentage points of pay for the Ministerial pension scheme’s membership. These additional contributions will mean that the increase in Exchequer contributions expected following the latest valuation of the parliamentary contributory pension fund will be lower than otherwise expected. Further, the Exchequer contribution will be reduced further to reflect increases in 2013-14 and 2014-15, following advice from the Government Actuary.
Ministers in the House of Commons make separate contributions towards their pensions as MPs. Responsibility for the setting of pension provision for MPs is the responsibility of the Independent Parliamentary Standards Authority, which has consulted on proposals to increase MPs’ contribution increases.
The details of the new scheme have been laid before the House, along with a copy of the response to the consultation from the chairman of the parliamentary contributory pension fund trustees and my reply to this response.
1Independent Public Service Pensions Commission: Interim Report 7 October 2010:
http://www.hm-treasury.gov.uk/d/hutton_pensionsinterim_071010.pdf chapter 8.