« Christopher Booker's Censored Column | Main | Pensioners Being Screwed Again »

Some Pensioners Doing Very Well

Telegraph | Money | Great Britain: a tale of two pension plans

MPs and mandarins can retire with saving plans the rest of us can only dream about, reports Faith Archer

Meagre improvements to state pensions for women in this week's Pensions Bill highlighted the gulf between the "gold-plated" pensions enjoyed by MPs and the public, experts said.

After 30 years of contributions, a backbench MP on £60,277 a year can look forward to retiring at age 60 on a final-salary pension of almost £39,000 a year, according to calculations by actuaries Watson Wyatt.
A person making the same contributions to a private pension could generate less than a fifth of the MP's risk-free returns, at £7,160 a year.

If they worked for a generous employer that topped up their 10 per cent money-purchase pension scheme contributions with a further 15 per cent, they could expect a pension of £18,000 a year.

To fund the same pension benefits as an MP, an individual would need to save a staggering £1.25m.....

While the Pensions Bill will raise the state pension retirement age to 68 by 2046, MPs and public sector employees can still retire at 60.

The Bill also announced that cash-strapped pensioners could endure another nine years of the state pension falling behind average earnings, in the same week that the Government confirmed that Paul Gray, the acting chairman of HM Revenue & Customs, is entitled to a pension pot of £1.7m.

Comments

Not _all_ 'public sector employees' - just civil servants. At least in Scotland Local Authority workers will also lose the possibility (they don't have the right) to take early retirement at 60 without an actuarial reduction (the so-called 'rule of 85' where if your age plus length of service equalled 85, and if you were permitted to take early retirement, you could get your pension at age 60 based on your length of service without any further reduction).

A local authority employee earning £60k (and there are damn few of those round here) would after 30 years service have earned a pension of £22.5k at age 65. Pretty good, since Gordon's ongoing raid has stuffed so many private sector schemes (many of which were way better than the LA scheme - the scheme at my dad's workplace would have paid out £30k on those figures), but hardly earth shattering.

The key factor is that MPs accrue a pension of one 40th of their salary per year for a payment of a mere 10% (it used to be 50ths, which is astonishing enough, but now...). All the public sector schemes I know of accrue at 80ths, with a maximum of 40 years (ie a pension of half your salary). Amazingly, if you sit as an MP for one parliament (say four years), you will get a pension of £6k a year at age 60.

Note also that the LA pension fund is a real fund, with real money in it that pays the pensions, unlike the MPs and Civil Service pensions which are just paid out of tax revenues.

Post a comment