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Hypocrisy claim as MPs raise pensions

Marie Woolf,Chief Political Correspondent
Wednesday 24 July 2002 00:00 BST
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MPs were accused of hypocrisy yesterday after voting themselves a big pension rise partly funded by the taxpayer.

Pensioners' groups, who have warned that badly managed funds and falling stocks will slash the value of ordinary people's retirement funds, reacted angrily and said the MPs' decision was a disgrace.

A committee of MPs voted by 14 to one to increase the value of their pensions by about a quarter of their value, at a cost to the taxpayer of £1.5m. The new system will mean MPs will be able to claim their pensions earlier. MPs, who earn £55,000 a year, will see their pensions entitlement rise from one fiftieth of their salary for each year of service to one fortieth. Nearly half of the increase will be funded by the taxpayer.

The committee member who opposed the move, Steve Webb, the Liberal Democrat Work and Pensions spokesman, said the rise was unnecessary in the precarious economic climate. He said MPs were trying to "cocoon" themselves from the pressures faced by constituents. "To the extent that there is a taxpayer subsidy it is being paid for by people who have worse pensions than us," he said.

Mr Webb was told by Robin Cook, the Leader of the Commons, in a parliamentary answer yesterday that increasing MPs' pensions would cost the public purse £1.5m over the next two years if all MPs took up the offer.

But Ben Bradshaw, the deputy leader of the Commons, said the Government expected costs to be clawed back from MPs in the long run.

The Senior Salaries Review Board, which advises on salary increases for MPs, hinted yesterday that MPs might get a smaller pay rise to take account of the pensions rise.

Mr Bradshaw complained that the deal had had been "widely misrepresented and misreported". He said: "The full cost of the increased pension will be borne by MPs themselves."

John Butterfill, the Tory chairman of the trustees of the parliamentary pension fund, said the new arrangements would allow MPs to raise their pensions contributions from 6 per cent to 9 per cent of their salary. This means they will be entitled to the maximum pension after 27 years' service rather than 33. Mr Butterfill said MPs would be setting a good example by saving more of their salary for retirement.

Rodney Bickerstaffe, president of the National Pensioners' Convention, said MPs were being hypocritical. "I hope that this spurs them on to do a lot more for all those millions out there who have got a very doubtful future because of the falling stock markets, corruption, errors and blunders and generally facing a very sad pension future," he said on BBC Radio 4's The World At One.

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