Neil Collins\'s Profile
Forget MPs’ perks – look at their pensions
Golly, it’s tough being an MP. All those Tesco till receipts, available for public delectation, and which among us has not wished that someone else would pay to have our moat cleaned?
It’s all grand entertainment, but these little follies, and even the grander ones of fiddling the second home designation, are insignificant when set against the most valuable MPs’ perk of all, their pension entitlements.
Final salary schemes are dying in the private sector, as companies are forced to estimate the likely cost and put the liability onto their balance sheets. They are still commonplace in the public sector, but only the police can retire on terms anything like as generous as Britain’s legislators have awarded themselves.
For each year served, an MP accrues one-fortieth of his salary. In other words, for simply being an MP for a typical four-year parliamentary term, he can look forward to a pension of one-tenth of the final salary.
This year, that salary is 63,291 pounds, so all those drones on Labour’s back benches who were unexpectedly swept into office in 1997 can console themselves, when they are swept out again next year, with a pension of 20,000 pounds a year for their 13 years of doing as they were told.
According to actuaries Punter Southall, to buy the equivalent annuity, with full protection against inflation and 50 per cent widow’s payment, would cost a 65-year-old 522,000 pounds, a sum far beyond the capacity of most people to accumulate over a lifetime of contributions, let alone a mere 13 years.
Of course the poor, defeated ex-MP will have to get out of the habit of billing the taxpayer for her living expenses, home improvements or dog-walking. Nor will he be able to employ some pretty niece in his parliamentary office. Like the rest of us, they will have to live in a world struggling with the consequences of some of their stupider decisions of the last decade. Serves them right.