19 March 2012: IPSA increases MP pension contribution rates
Following its recent public consultation, IPSA has today confirmed that MPs’ pension contribution rates will increase by 1.85%. The increase will take effect from 1 April 2012.
Given the increases in pension contributions in other public service schemes, IPSA has decided that it is appropriate for MPs to pay more into their own pensions. This decision also recognises the vote in House of Commons last year calling on IPSA to increase pension contributions in line with increases in other public service schemes.
Unusually, in their current pension scheme, MPs can select the rate at which they accrue benefits – 40ths, 50ths, or 60ths of their annual salary. In recognition of the already high contribution some MPs make to their pensions (11.9%), IPSA has decided to allow MPs to change the rate at which benefits accrue. Should MPs choose to reduce the rate of their accrual, their contributions would be lower but so too the benefits they receive from the taxpayer.
The contribution increase is an interim measure as IPSA carries out its longer term review of pay and pensions – a review which will be complete by the end of 2013 and which will make MPs’ remuneration sustainable and fair to MPs and taxpayers alike.
Notes to editor:
- Pension contribution rates:
- At 40ths accruals, MPs currently contribute 11.9%. From 1 April, they will contribute 13.75%.
- At 50ths accruals, MPs currently contribute 7.9%. From 1 April, they will contribute 9.75%.
- At 60ths accruals, MPs currently contribute 5.9%. From 1 April, they will contribute 7.75%.
- Last month, IPSA announced that MPs’ pay will be frozen for 2012/13 and in due course there will be a public consultation on a 1% increase in the years 2013/14 and 2014/15.
- An MP’s salary is £65,738.