National Health Service (Amended Duties and Powers) Bill
Debate between Brian H. Donohoe and David Anderson(9 years, 5 months ago)
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Public Service Pensions Bill
Debate between Brian H. Donohoe and David Anderson(11 years, 6 months ago)
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Parliamentary Contributory Pension Fund
Debate between Brian H. Donohoe and David Anderson(12 years, 6 months ago)
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Mr Donohoe
I have to disagree with the hon. Lady, and I will tell her why. If we put things out to independent arbiters such as the Senior Salaries Review Body, and they make recommendations after consultation with all sorts of bodies, I would argue that the Government should not intervene. In that case in particular, we should not have overturned that decision. This is where we have gone wrong so many times in the past. In the great number of years that I have been a Member of Parliament, I have seen this happen time and again, and my research leads me to believe that every Prime Minister since 1945 with the exception of John Major has interfered in the conditions of service of Members of Parliament to the detriment of those conditions.
I feel strongly about this—so strongly that, as the arch-enemy of IPSA, I argue on the basis of what I have seen that it is far better for it to have that independence, which is clearly documented in legislation, than to have this constant interference in the conditions of service of Members of Parliament. There has not been a great understanding by the Government of some of the elements of the arguments with IPSA.
Given that pay and pensions are linked, it is only sensible for IPSA to take stock not only of all elements of conditions of service, but of the whole question of pensions, which I have always believed to be deferred income for any individual in employment who has a pension fund.
Other considerations relating to IPSA in consultation with trustees include the fact that it has to wait for a valuation. Here, as I say, the Government have not fully understood the position on Members’ pensions or the calculations of where they should go in respect of any increase in contributions, any increase in the age of retirement or any other element affecting those pensions. Clearly, the results of the 2011 valuation of the scheme will shortly be finalised, which I take as a very strong argument for leaving the decision about increases in contributions, if there are to be increases, to IPSA itself. As far as we are concerned, we are in a cost-sharing scheme, as a result of which we must see what the actuary says about any changes to contribution rates before taking a decision that puts us in line with anybody else. As Members will know, there have been increases to pension contributions over a relatively recent period, which I do not think any other members of the public sector have had to face. I suggest that it is important to take that into account, as we are told it will be by IPSA.
I suggest that trustees would also recommend giving further thought to other cost-saving measures in the scheme to make it simpler and to make the benefits clear in a way that everybody understands. From the discussions I have had with Members of Parliament over the last few weeks, I believe that there has been a misunderstanding of many aspects of the scheme. That needs to be taken into account. We also need to consider, if possible, as a means of getting away from increases in contributions, the whole question of increasing the pension or retirement age. It could be part of the answer to some of the problems we face.
Another misunderstanding is the view that this scheme is expensively funded in itself. Schemes like this should be treated differently from unfunded or notionally funded schemes, as assessing changes to member contribution rates should take into account any excess returns generated by funded schemes from the investment strategy. I understand that the London Pension Fund Authority scheme, which is a funded scheme, might not be subject to the general contribution increase that the Government hope to implement. If there are exceptions there, they can be made anywhere else. I am convinced that an awful lot of negotiations are still to take place, and these will bring to the fore some of the elements of the pension fund that are not best understood.
Mr Anderson
Is there not a big problem with this whole debate in that we talk about these things as if they are a matter of negotiation, but in fact what we are really talking about is the fact that the Government are imposing a stealth tax on all public sector workers? They are not having negotiations about that, and they are not taking actuarial advice or the effect of the schemes into account. All they are saying is, “There will be an increase on public sector workers’ pensions” as a matter of fact—without allowing negotiations about any scheme to be taken into account.
Mr Donohoe
I am not in a position to answer that, as it is for the Leader of the House to do so, although I certainly have some sympathy with what my hon. Friend says.
Some of the closest comparators to Members are senior civil servants. Members of the civil service pension scheme and other schemes such as the scheme for staff of the House of Commons and the House of Lords pay either 3.5% or 1.5% contributions, depending on when they joined the civil service. For that contribution, they either build up a pension at the rate of one sixtieth, or one eightieth plus tax-free cash sum—which equates to one sixty-fourth—with a retirement age of 60, or they build up a pension at the rate of one forty-third with a retirement age of 65. That must be taken into account along with everything else in which we will be involved between now and 2015. It is clear from the discussions that have taken place that consideration must be given to all elements of Members’ contributions.
People may think that I only represent the House in this regard, but I have constituents who are aggrieved by what is happening to their pension funds, and I have every sympathy with them. However, I am here almost as a shop steward—I am not sure that that expression is much liked on the Government Benches—to represent Members in the context of their conditions of service. People describe this as a gold-plated scheme, but although it is a good scheme—indeed, I would argue that it is a brilliant scheme—what is not understood is that only a few Members of Parliament retire from this place with a full pension. Of the 650 serving Members of Parliament, only 35 would leave with one today. Another thing that is not understood is that most Members pay for the rate of one fortieth, which means paying 11.9%. So the scheme cannot really be described as gold-plated.