Parliamentary Contributory Pension Fund

Stephen Phillips Excerpts

Monday 17th October 2011 Commons Chamber

[Ms Eagle]

I do not want to use the word “frustrated” in the Chamber because it is rather a difficult one to use. I did not think we were disagreeing. I thought I was answering slightly more accurately the point that the right hon. Member for Wokingham had made about trustees’ duties in law. The Leader of the House was answering a slightly different question about the fact that IPSA would be in charge of the scheme. Again, that does not undermine our existing understanding of trustee law and the fiduciary duties of pension trustees.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

rose—

[Ms Eagle]

I suspect that a lawyer is going to help us with this point of debate.

[Stephen Phillips]

I am grateful to the hon. Lady for giving way. I do not know the answer, but can she, and in due course the Leader of the House, confirm the position as I expect it to be, which is that the trustees will continue to administer the scheme for the benefit of the beneficiaries, and the terms of the scheme for existing entrants but not for their accrued contributions will be set by IPSA, as indeed will the terms of the scheme for new entrants in due course? The trustees will retain the duties that I understand them to have under the relevant legislation.

[Ms Eagle]

That is also my understanding, although I am not a trained lawyer, unlike the hon. and learned Gentleman. However, I did a stint as Pensions Minister so have some understanding of these matters.

Other aspects of the motion have proved more controversial, if the presence of the amendment, which proposes deleting everything from line 6, is anything to go by. The wording of the motion was not decided by cross-party agreement, unlike the decision in principle to transfer responsibility for pension arrangements to IPSA. It is the Government’s wording and appears to reflect their position on public sector pensions more generally.

When Lord Hutton produced his final report on public sector pensions, it fell to me, as shadow Chief Secretary to the Treasury at the time, to respond to it on behalf of the Opposition. We certainly welcomed Lord Hutton’s commitment to the ongoing provision of pay-as-you-go pensions in the public sector—our own included—as a matter of principle. We also noted his view that the pensions currently provided were not—to use the phrase that is bandied about—gold-plated. It is easy to forget in the welter of propaganda about the generosity of public sector pension provision that the majority of public sector pensioners receive less than £5,600 a year. Indeed, many beneficiaries are part-time women workers who take home considerably less than that after a lifetime of service. Both the Prime Minister and the Deputy Prime Minister have been guilty of using that alarmist phrase. We may have a far better and more measured debate about these important matters if they would accept what Lord Hutton has said and stop using that highly misleading and derogatory phrase about public sector pension provision.

Although Lord Hutton made the case for an increase in contributions, which is mentioned in the motion, he did not specify what it should be. He stated on page 119 of his interim report that the Government

“should have regard to protecting the low paid and to the possibility of significant increases in the number of employees opting out of schemes and should consider staging increases in contributions where appropriate, to minimise this risk.”

After the Hutton report was published, the Opposition recognised the merit of considering a move to career average benefits, rather than final salary schemes. We also recognised the pressure generated in all pension schemes—again, ours is no different—by increasing life expectancy. We had acknowledged this in government by negotiating changes to existing schemes involving increases in contributions, later retirement ages and “cap and share” arrangements. These agreements will save £1 billion a year.

Clearly, MPs’ pensions cannot be immune from such changes, and I am sure that IPSA will consider that in due course when it looks at what our future contributions and benefits should be. I am also sure that it will take into account the 1.9% increase in contributions that was agreed in 2009 as a cost-saving measure in our scheme, which takes Members’ contributions to 11.9%, 7.9% or 5.9% of salary depending on the chosen accrual rate. Likewise, I expect IPSA to take into account the fact that the average time a Member serves in the House is 15 years.

I know that some right hon. and hon. Members have suspicions about the timing of today’s motion, which is ahead of any outcome of the so-called negotiations on the pension provision for millions of public sector workers. The motion might be read in a certain way, as if it is pre-empting those negotiations, because it states that IPSA should increase Members’ pension contributions

“in line with changes in pension contribution rates for other public services schemes.”

The fact is that the talks are ongoing. If they are to have any meaning whatsoever, rather than being exposed as a charade, we cannot know in advance what their results will be.

--- Later in debate ---

[Mr Chope]

I will make a brief response to my hon. Friend the Member for Stourbridge (Margot James), Mr Speaker. What she says about perceptions is important. That is why it is essential that the Government do not bring forward motions that seem to be designed to appeal to an outside audience, while at the same time leaving things rather vague and open to the accusation that they are trying to tie the hands of the Independent Parliamentary Standards Authority.

[Stephen Phillips]

Surely all that the second part of the motion does is establish that we should be treated in precisely the same way as other public servants.

[Mr Chope]

It does not say that, actually, because if it did, it would be worded in that way. That is how it is being interpreted. If nothing else comes from this debate, something will have been achieved if that is how the Independent Parliamentary Standards Authority interprets the motion. My concern and the concern of many colleagues is that it seems as though the Government have picked a few items and put them in the motion.

To take one public service scheme as an example, the Government have made it quite clear that they do not think that the principles we are talking about today should apply to the armed forces scheme. I support the Government in that, but it is a completely separate issue from trying to tie the hands of IPSA at this stage. IPSA will come forward with its proposals and they will go out to consultation, at which point the Government will have a chance to express a view, as will everybody else.