Outside the marginals

a commentary on the politics that followed the UK 2010 & 2015 elections

MPs pay – the rewards or penalty for what they are?

I have previously expressed the opinion that MPs are overpaid.

Today’s proposal (even/especially taking the pension changes into account) do not change that opinion.

The Independent Parliamentary Standards Authority (Ipsa) wants to raise salaries by £7,600 to £74,000 in 2015.
BBC News Website 12 December 2013: MPs’ 11% pay rise plan defended by salaries watchdog

This does not appear to go far enough as far as many MPs are concerned:

Ipsa’s final report published on Thursday points to an anonymous survey taken last year in which 69 per cent of MPs considered themselves underpaid.

The YouGov survey of 100 MPs, conducted in October 2012, found that MPs considered the right level of pay, on average, to be £86,000.

Though the figure varied between parties, with Labour MPs on average considering £77,000 to be appropriate, Lib Dems opting for £78,000 and the Conservatives £97,000.Channel 4 News Website, 12 December 2013: MPs ‘cannot refuse’ Ipsa’s 11 per cent pay rise

IPSA are recommending that MPs should continue to have a (cushy) defined benefit pensions scheme (i.e. the investment risk lies entirely with the employer = parliament/taxpayer, not with the potential pensioner as in defined contribution schemes) but it should be based on “career average” rather then “final salary”. Final salary schemes were great for those who experienced a lot of promoting during their employment because they were in effect subsidised by those who did not get promoted. (This is because the heavily promoted get a pension based on a high final salary but supported by contributions paid whilst on a lower salary.) Given that most MPs do not get “promoted”, I suspect that the change from a final salary to a career average basis will not hurt MPs – it may even help keep contributions down (because there is no longer any subsidisation of the highly promoted).  Smoke and mirrors?

(The accrual rate is a generous 1/51st of salary per year rather than the more normal 1/60th or even 1/80th experienced by those in most of the remaining – rare – defined benefit schemes).

The Government Actuary’s Department assessed that the cost of this scheme would be approximately 22.9% of payroll in 2013.  We recommended that the taxpayer should pay 60% of the cost of this accrual, with MPs paying 40%. This reflected the average split of contributions in the other public service schemes.

with our intention to make the overall remuneration package, cost-neutral, we judge it appropriate to increase the MPs’ share of the cost. This will be achieved through increasing the share of the cost of accrual borne by the MP to 46% (from 40%). The taxpayer will therefore pay 54% of the cost and the total remuneration package will not be more expensive.
IPSA MPs’ Pay and Pensions Final Report December 2013

IPSA says that because MPs are having to pay higher contributions (back to the parliamentary authorities) the overall cost of the whole pay and benefits proposal is neutral. I seem to remember when the last employer of mine who offered a defined benefit scheme revised the contributions, we did not get extra pay to make those contributions. It was a case of either pay the extra or accept a less advantageous accrual rate – either way, we the employees paid and were “less well-off” as a result. They later closed the scheme anyway.

This proposal still smells.

BBC North East and Cumbria Look North, 12 December 2013 reported:

  • Average Pay in North East £25, 168 – down 8.3%
  • MPs Proposed Salary £74,000 – up 11%

Whichever way you present it you are still saying that MPs are getting near as damn it 3 times the average pay of the constituents.

That stinks.


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2 thoughts on “MPs pay – the rewards or penalty for what they are?

  1. Peter Lanky on said:

    My MP in Wigan is merely a machine employed by the Labour Party to vote for whatever the Labour Party tells her to vote, in which she has a 100% record. This happens whether or not the policy is good for the people of Wigan or not. Any questions I have asked of her have simply been passed to the relevant government department for some mug (probably at Executive Officer lever paid under £30K) to provide an answer.

    It would take a lot to convince me that this ‘work’ is worth anything close to £74K.

  2. Pingback: Pay: MPs and comparability | Outside the marginals

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