Parliamentary Contributory Pension Fund

Debate between Peter Bone and Brian H. Donohoe

Monday 17th October 2011 Commons Chamber

[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?

[Mr Bone]

I do not understand why we have suddenly created a post for the Government in the running of Members’ pensions.

[Mr Donohoe]

I will explain. That individual would be responsible only for representing the Ministers’ section of the pension fund. A former Minister would have a different contribution rate. I see the Leader of the House agreeing with me on this. The pension fund administers that at present and will continue to do so, but by virtue of the contribution, it will come from the Department that the person was in or from the civil service. The Government are not going to start playing a part in the Members’ pension fund. I hope that that answers the hon. Gentleman’s question.

There was originally a proposal in the Bill that members of the board of trustees could be removed by IPSA. That has now been forgotten, and the eight members of the board will continue to be appointed by this House and no one else. They will continue to be elected or selected from this place or from among former Members. At our trustees’ meeting on Thursday, we thought it sensible to determine that we would lose two members at this stage so that this whole process could be carried out smoothly. Otherwise, all sorts of complications could have arisen. As a consequence, I would like to put on record my appreciation—and that of the other members of the board—for my hon. Friend the Member for Lewisham West and Penge (Jim Dowd) and the hon. Member for Watford (Richard Harrington), both of whom have now withdrawn as trustees.

The increase in contributions is the main point of any argument on this matter. I have already argued, and I want to reinforce the point, that IPSA must be seen in every respect as independent. I see no reason why the House should indicate that it would like our pension contributions to be treated in the same way as those of other public service workers. IPSA has a statutory duty to act independently of Parliament, and by giving such an indication, the House is putting undue pressure on IPSA. It should not be influencing IPSA in that way. IPSA must undertake its role as laid down in statute, and in no other way.