MPs' Pension Scheme - 2012 onwards - Commons Library Standard Note

The Parliamentary Contributory Pension Fund (the Fund) is a statutory, defined benefit pension scheme. It operates on a funded basis, meaning that contributions from employees and employers are paid into a fund, which is invested, and from which pension benefits are paid. The Fund is made up an MPs’ Pension Scheme (which provides benefits for MPs and certain office holders, such as paid chairs of Select Committees) and a Ministers’ Pension Scheme (which provides benefits for Ministers). The Independent Parliamentary Standards Authority (IPSA) is responsible for the oversight of the MPs’ Pension Scheme. The Minister for the Civil Service is responsible for oversight of the Ministers’ scheme.

Reform of MPs’ pensions is underway. Like other public service pensions, MPs’ pensions are now increased in line with the Consumer Prices Index (CPI), rather than the Retail Prices Index (RPI). In addition, contribution rates for MPs have increased. MPs can opt to accrue pension benefits at one of three rates, according to which they contribute at different rates. From April 2012, MPs’ contribution rates increased by 1.85% to: 13.75% (for members with a 1/40th accrual rate); 9.75% (1/50th accrual rate); and 7.75% (1/60th accrual rate).

IPSA is conducting a review of MPs’ remuneration (pay and pensions). A guiding principle is that “as far as it practicable MPs’ remuneration should be determined in the same way as that for other citizens”. Although definitive plans have yet to be announced, IPSA has indicated that it will be looking to announce details of a new scheme, following a period of consultation with statutory parties, before the 2015 General Election.

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