Now taxpayers bail out MPs' pensions

A fresh row over MPs' pay and perks erupted after taxpayers were asked to foot an £800,000-a-year bill to bail out their gold-plated pension scheme.

Under the plans unveiled by the Leader of the Commons, Harriet Harman, the Exchequer will increase its contribution from £12.4m to £13.2m a year. MPs will each have to pay an extra £60 a month to help fill a £51m black hole in the parliamentary pension fund.

The package was published after government financial experts found a growing deficit in the pension scheme because former MPs were living longer.

The Government Actuary said that taxpayer contributions to the scheme – already one of the most generous in the country – would have to increase by £2.1m a year to cover the shortfall.

Ms Harman said she wanted MPs to increase their payments into the scheme from 10 per cent to 11.9 per cent – equivalent to £60 a month – to help limit the extra bill for the taxpayer.

Steve Webb, the Liberal Democrat pensions spokesman, branded the decision a "spectacular own goal for MPs". "The pensions of MPs and other well-paid public sector workers have to be brought in line with reality. With members of the public losing their jobs and seeing their pensions plummet, MPs cannot insulate themselves from the harsh realities of the recession."

Susie Squire, the campaign manager at the Taxpayers' Alliance, said: "Asking for more money to plug the deficit in politicians' gold-plated pensions is an utter disgrace. These pensions have been a bottomless pit for too long, and continuing to pump in taxpayers' money is no solution in the long term.

"Why should taxpayers fund politicians retiring into the lap of luxury when they have seen their own pension reduced out of recognition? If MPs want such a generous pension, they must pay for it out of their own salary and not simply keep dipping into the pockets of hard-working people."

Downing Street said the situation was not "a long-term or sustainable position". In February, Gordon Brown called for a fundamental review of the parliamentary pension system.

The parliamentary authorities also launched a mole hunt amid claims that details of MPs' expenses were being offered to newspapers for £300,000.

A spokeswoman for the Speaker said a "thorough investigation" had been launched, indicating police could be called in if evidence of a breach in the law was found. The Speaker told MPs he was "deeply disappointed" the expense details became public.

More than one million receipts have been scanned into computers in preparation for their publication later this year. MPs have a month to ask for addresses and personal information to be removed before the data is released.

Pressure for reform of parliamentary allowances intensified as the independent Committee on Standards in Public Life said it was bringing forward its planned review of MPs' pay and expenses. Its findings will be published by the end of the year.