Raising MP\’s Pay?

Not on these figures matey:

Pensions for MPs will cost taxpayers nearly three times the original estimate, it has been revealed.

The annual bill for funding MPs\’ generous final salary pension schemes could be as high as £20.5 million – or £29,000 for each one.

Of course, this isn\’t the figure publically announced:

The most recent Commons accounts report that the cost to the taxpayer of paying for this scheme is £7.8 million – or £11,000 per MP.

However this is calculated using an optimistic view of the stock market. Under an accounting treatment used by most companies and public bodies, the actual cost is £20.5 million, or £29,000 for every MP.

Pension contributions should be counted as pay, at least for the purposes of measuring the relative incomes from different jobs. For they are a form of delayed pay.

But as I\’ve said before, MPs are currently grossly over paid, as evidenced by the fact that so many people are both qualified to be one and eager to be so.

 

4 comments on “Raising MP\’s Pay?

  1. MPs are grossly overpaid because they have stopped performing the work they are supposed to do. In the private sector there would be severe cut-backs if 70 – 80 per cent of the work had gone somewhere else.

    Turning into a pendant here: that should be MPs’ pay as more than one of them want to have more of our money. Oh and the word is publicly. Sorry. 😉

  2. Perhaps I am indeed as dim as I sometimes appear (allegedly) but these figures make no sense to me. What is the £29,000 described as a cost? Is that the annual contribution (“employer’s contribution”) made by the taxpayer to the MPs’ scheme? Is it the annual pension received by an “average” MP after their “service”?

    The size of fund needed to provide fortieths benefits, index linked, even from age 60 is enormous, and £29,000 doesn’t figure anywhere. Put it this way; Joe Average (male, non-smoking) would get a pension income of about £5600 a year from a fund of £100,000 at age 60, assuming he didn’t want any frilly bits like index linking, guaranteed increases and so on. To get an income of £29,000, do the arithmetic – fund of £518,000 – and you can double that, at least, if you want index linking.

    So, at a million quid a pop, that’s oohhhhh, what? A billion at least, given former MPs and present incumbents? WTF does £20 million come from?

    A couple of years ago, the average pension fund for males in the private sector was £25,000.

    So begging the obvious question – are they worth it? (Errr, no) – what do the figures given actually mean? That Parliament can report the annual cost of the liability as opposed to the total liability into the future?

    Apologies if I have indeed missed something obvious but I’ve learned the hard way that journalists and figures to do with pensions and finance generally aren’t to be trusted.

  3. It’s the annual contribution, and your rule-of-thumb workings are pretty much spot on. The quotes above aren’t clear, but the article is liberally sprinkled with the use of “annual”.

    I could explain /exactly/ how annual contributions are calculated in accounting terms – but again, you’re near enough right that it’d be v. v. dull and almost entirely pointless.

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