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8 February 2012: IPSA consults on MPs’ pensions

IPSA has today announced that it is continuing the pay freeze on MPs and is launching a public consultation on its recommendation to increase MPs’ pension contributions by 1.85%.

Given the recent pay restraint and the settlements across the public sector which will see most people contribute more, IPSA has decided that it is appropriate for MPs to share the burden. This decision also recognises the vote in House of Commons last year calling on IPSA to increase pension contributions in line with the public sector.

The pay freeze will continue for 2012/13 and in due course we will consult on a 1% increase in the years 2013/14 and 2014/15.

By the end of 2013, IPSA will announce its decision on MPs’ pay for the next Parliament.

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%), we are also consulting on allowing 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.

A contribution increase would be 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.

In carrying out its longer term review, IPSA will be mindful of the recommendations of Lord Hutton, addressing the benefits received under the pension scheme as well as the contribution rates.

The consultation will run until 29 February and IPSA invites views from all interested parties. IPSA will take a final decision on a contribution rise once the consultation closes.

Sir Ian Kennedy, IPSA chair, said today:

“We have been given responsibility for reviewing and, as necessary, reforming MPs’ pay and pensions. We are exploring the broader question of how to reform MPs’ remuneration to make it fair to MPs and taxpayers alike and, crucially, how to make it sustainable.

“In the meantime, we must be mindful of the conditions in the rest of the public sector where pay has remained static and where settlements will see most people pay more into their pensions too. 

“While we address the longer term changes which are needed, I believe it is right that we act in the interim so that MPs’ circumstances more closely reflect those experienced by others.”


• An MP’s salary is £65,738
• At 40ths accruals, MPs currently contribute 11.9%. Under the proposals, they will contribute 13.75%
• At 50ths accruals, MPs currently contribute at 7.9%. Under the proposals, they will contribute 9.75%
• At 60ths accruals, MPs currently contribute at 5.9%. Under the proposals, they will contribute 7.75% 
• The consultation is available on IPSA’s website. Responses to the consultation should be sent by email.


For more details, contact Mark Anderson on 020 7811 6488.