House of Commons Library

MPs Pension Scheme - background

Published Thursday, January 10, 2013

This note provides background on the pension scheme for MPs - the Parliamentary Contributory Pension Fund - and its development to 2011. The current debate on reform of the scheme is covered in SN 6283 MPs pensions - 2012 onwards

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The Parliamentary Contributory Pension Fund (the Fund) is a funded, defined benefit pension scheme, where Members and the Exchequer share the costs. The Fund is made up of two schemes – an MPs’ Pension Scheme and a Ministers’ Pension Scheme. The main difference between the two is that the MPs’ scheme provides pension benefits based on final salary, whereas the Ministers’ scheme provides benefits based on career average salary.

In January 2008 the Review Body on Senior Salaries (SSRB) recommended that the Exchequer contribution to the cost of benefit accrual should be limited to 20 per cent of payroll and that, if it was likely to rise above this level, there should be a major review of the Fund. In June 2008, the Government Actuary’s Department advised that the cost was likely to rise above 20 per cent, effectively triggering the review. The SSRB published its report of the review of the PCPF in July 2010. In response, the Government said decisions on the future of the scheme should be informed by the recommendations of the Independent Public Service Pensions Commission, which had been set up to review public service pensions more broadly.

This note provides an overview of the PCPF, and the debate on reforms, up to November 2011. A new note - SN 6283 MPs’ pensions – 2012 onwards – takes the story forward from that point. The pensions of Ministers and senior office holders are covered in a separate note, SN 4586.

Commons Briefing papers SN01844

Author: Djuna Thurley

Topics: Members of Parliament, Pensions

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