Parliamentary Contributory Pension Fund

Debate between John Redwood and Brian H. Donohoe

Monday 17th October 2011 Commons Chamber

[Mr Donohoe]

I do not have time to give way again, because I am conscious of the fact that so many Members want to intervene or make speeches. Rather than reading out the minutes of meetings, if the hon. Gentleman writes to me I will furnish him with that information.

[Mr Redwood]

Will the hon. Gentleman give way?

[Mr Donohoe]

I will give way to the right hon. Gentleman if I get to a point at which I have some leeway, but I have some important things to outline before I take any further interventions.

The trustees of the time had no choice about the move to IPSA, which was agreed by a motion of the House. However, they fought for and won significant concessions within the Bill that made the change. There is absolutely no doubt that the protection of Members’ pensions was at the forefront of their discussion, and I have to praise the staff and advisers of the pension unit and its previous chairman, Sir John Butterfill. They are to be congratulated on the protection that they got for the pensions of Members and retired Members.

The legislation necessary to transfer the Leader of the House’s powers to IPSA was in place before my appointment as chairman of the board of trustees, but as I continue I shall tell the House that the trustees will have important powers that they did not have previously. The transfer of powers was agreed, as all hon. Members will know, in the wake of the expenses scandal, following the recommendations of the Kelly report. One recommendation was that IPSA should have statutory responsibility for setting Members’ pay, which of course includes pensions, and other conditions of service. It is important to understand that that must be done in consultation with the House. IPSA also has the responsibility of oversight for the administration of Members’ pensions.

Therefore, amendments to schedule 6 to the Constitutional Reform and Governance Act 2010 were made to give effect to the decision to transfer powers over pensions. That is what the Act was all about, and that is what it achieves. However, Members who read the Act will find that aspects of it clearly transfer more powers to the board of trustees.

[Mr Redwood]

Will the hon. Gentleman make that clear, because I do not quite understand him? Is he saying that the trustees have the power and the duty either to consent to IPSA proposals or to withhold their consent? If they have that power, how might they use it?

[Mr Donohoe]

The trustees do not have that power. Given IPSA’s independence, which is enshrined in legislation, at the end of the day, it makes the ultimate decision, but it must do so after meaningful consultation with the trustees. Any changes that IPSA wishes to make to the pension fund must be reported to the Speaker and laid before the House. That is the power within the Act.

The trustees at the time were presented with the proposals to amend the 2010 Act. They asked for and got a number of amendments, but they had no power to overturn the Government’s proposals, which were eventually agreed. I can tell the House that the trustees made an exceptional effort and fought extremely hard in that period, and they won numerous and significant protections for Members’ pension benefits. By way of an example, accrued benefits will be fully protected after the transfer. Because the benefits have been built up, they obviously must be protected, but they are not currently protected and they could be interfered with. That is a clear indication of what the trustees were able to implement—that protection will be enshrined in legislation following the transfer. I do not have time to give more examples, but I can give them to hon. Members after the debate if they want me to.

IPSA can make changes to MPs’ future pension benefits and contributions only after formal consultation with the trustees, the majority of whom, following the transfer of the power, which will happen whenever the Leader of the House gets round to signing the order, will be Members of Parliament or former Members of Parliament. That is an enhancement of the trustees’ powers, because there is currently no such requirement.

Currently, there are 10 trustees—eight are Members of Parliament and two are former Members, but when the order is signed, one trustee will be appointed by the board of IPSA and one will come from the Government. The Ministry for the civil service, the head of which is the Prime Minister, will appoint the latter. I do not suppose the Prime Minister wants to become the trustee of the Members’ pension fund, but who knows?