Their pensions will be boosted too

MANY MPs will see pensions increased by thousands of pounds a year as a result of their controversial pay rise.

MPs elected before 2015 will receive up to £4,900 a year more in retirement, as pension entitlement is linked to their final salary.

The taxpayer-funded final-salary pension scheme has been scrapped and replaced by a career-average scheme – but the pensions already built up by MPs under the old scheme will be retained.

The Government’s own auditors say the pension increase linked to this latest pay rise will cost taxpayers £10million.

Jonathan Isaby, of the TaxPayers’ Alliance, said: ‘The Independent Parliamentary Standards Authority should have thought through the unintended consequences of their own tone-deaf decision to increase pay.

‘These unelected, seemingly unaccountable quangocrats have assured us that taxpayers won’t foot any extra bills as a result of the increase, but these revelations cast those assertions into real doubt. Now is not the time for the cost of politics to be going up.’

Under the House of Commons pensions scheme, MPs are able to build up retirement income based on how long they have served.

Until last month’s election, an MP’s retirement income increased by one fortieth of their final salary for every year they stayed in the Commons. This meant that if an MP served ten years they could retire on a quarter of their final salary.

So, under their salary of £67,060, an MP elected in 2005 would have received £16,765 a year in retirement. However, as salaries are set to increase to £74,000, they can look forward to £18,500 in retirement.

It means the proposed 10 per cent pay rise is worth £1,735 a year extra for life to MPs elected ten years ago. The pension bonus is worth even more for MPs elected in the general elections held in 2001, 1997, 1992 or 1987.

MPs elected alongside David Cameron and George Osborne in 2001, who have now served 14 years in the Commons, are in line for an extra £2,429 a year, while those elected in 1987 will see an additional £4,858.

A document drawn up by the Government Actuary’s Department – which calculates the cost to taxpayers of pension changes – costs the proposed £6,940 pay rise at £10million.

However, the Independent Parliamentary Standards Authority, which came up with the plans, insisted the proposals will not cost the taxpayer overall.

This is because the new pensions scheme is based on average earnings rather than final salary. The system, which all MPs have been transferred on to, will also be less generous – paying out just under one fiftieth of a salary for each year rather than one fortieth.