Mandelson in line for £1m pay and pension package

Published on Sunday 12 October 2008 22:05

PETER Mandelson is in line for a taxpayer-funded pay-off and pension of up to £1 million after leaving the European Commission to rejoin the Cabinet.

The new Business Secretary is entitled to the package despite giving up his post as EU Trade Commissioner voluntarily after four years.

The scale of the compensation – on top of his 104,386 ministerial salary – is likely to provoke anger amid separate criticism of the City bonus culture and its role in the credit crunch.

Under generous EU rules, Mr Mandelson will be eligible for around 78,000 in "transitionary payments" annually for the next three years.

The money will also be subject to preferential tax rates devised for EU officials.

The top-up ensures that his income in his new job is the same as his 182,500 salary as a commissioner.

When he reaches 65, Mr Mandelson will also receive a gold-plated pension, starting at 31,000 and then rising in line with the cost of living.

Buying a pension of that size in the private sector would require a fund of around 750,000, according to experts.

As he relocates from Brussels to London, Mr Mandelson is also due a one-off resettlement grant of 15,000.

The former Northern Ireland Secretary takes his seat in the House of Lords today as Lord Mandelson of Foy and Hartlepool. Hartlepool was his Commons constituency, while Foy is a village in Herefordshire where he took holidays.