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Nick Harvey MPStanding up for North Devon since 1992 |
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Parliamentary Contributory Pension Fund
Until taking up Ministerial office, Nick served as one of the Trustees for the House of Commons pension fund. The Trustees are responsible for the fund's investments, administration, and - within the legislation laid down by Parliament - its operating rules.
There are many myths in the media about Parliament's pension fund and its benefits, some of which deserve debunking.
It is a final salary scheme, and several of these have closed - at least to new members - in recent years, so to that extent it might be thought generous, though it is by no means unusual. Members of the scheme generally accrue benefits in increments of 1/40ths (of final salary) annually, and this is more generous than many such schemes - though by no means unique. Taken in the round, for example, fire and police service pensions with their provision for early retirement could be viewed as arguably more beneficial.
However, MPs pay 12% of their gross salary into the fund each year and this is very much higher than most pensions in either the public or private sectors. And the ongoing contribution from the Treasury - at 18.1% of salaries - is by no means exceptional as an employer contribution. If this drifts towards 20% a fundamental review of the scheme is triggered - which in the current investment climate is likely to happen forthwith.
Unlike many other schemes, MPs cannot retire before 65 on their full pension entitlement. And another point to consider is that MPs generally interrupt careers for some years in order to enter Parliament, and sometimes the same again after leaving. The average pension is paid out in respect of only eight years' service.
The Senior Salaries Review Body (SSRB) in its 2007 review of Parliamentary pay concluded that the Parliamentary pension scheme provides benefits in the upper quartile of private and public sector comparable schemes. So MPs certainly have nothing to moan about - but equally the scheme is not quite the golden goose that the media would have people believe.
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