MPs' super-pensions

Published on Sunday 22 June 2008 21:01

MPs are to be congratulated in showing restraint by taking no pay rise (your report, 18 June). Let us not feel too sorry for them, however, as we have the annual value of their taxpayer-funded pension to consider.

A backbench MP on 62,000 makes around a 10 per cent contribution to his or her pension. Using current values, this would produce, after 26 years, a fund of 161,200, at which point the MP may claim a two-thirds index-linked final salary of 42,700.

To buy such a pension in the private market would require a fund in the region of 950,000, creating a shortfall of 788,000. This equates to an annual value of 30,338. Add on tax and NI and the figure becomes around 39,500.

Little wonder MPs rarely mention their own situations when debating pension reform. If really serious about setting an example, they would forego these taxpayer-funded arrangements and contribute to private pension funds, as they expect millions of private sector workers to do.

DAVID F DONALDSON

Lawers Crescent

Polmont, Stirlingshire