MPs may be asked to contribute more towards their pensions to help alleviate the Parliamentary pension scheme's deficit, Harriet Harman, leader of the House of Commons, has announced.

In a written statement to the House of Commons, Harman has advised that an MP on the 1/40th accrual rate should be required to pay an extra £60 per month on top of the current £316 contribution, increasing total annual contributions for a 2009/10 salary to around £4,625. Those on lower accrual rates may also be forced to pay a net additional contribution of around £60 a month. There could also be an extension to the cap on MPs' accrual to include those over the age of 65 who joined the scheme before 1 June 1989.

The proposed changes have come about following the publication of a report by the Government Actuary, which shows that, since the last actuarial valuation in 2005, the underlying cost of benefits accruing under the Parliamentary pension scheme has increased from 27.4 per cent of the pensionable payroll of scheme members to 32.2 per cent. This has been attributed to increasing life expectancy.

The Government Actuary has also decided that the fund's deficit and the contribution to amortise this deficit remain much the same as at 2005. However, the deficit has increased from £49.5million to £50.9million.

In January 2008, a report by the Review Body on Senior Salaries (SSRB) on parliamentary pay, pensions and allowances, advised a review of the fund should it become likely that the Exchequer contribution rises to more than 20 per cent of payroll.

Following a warning from the Government Actuary that this was likely, the Prime Minister asked the SSRB to conduct a fundamental review of the pension provision for MPs, Ministers and other Parliamentary office holders. The SSRB is later expected to comment on the full range of options for reducing the Exchequer contribution, considering the merits of defined contribution or money purchase arrangements.

Harman added in the statement that they shall be consulting the Trustees of the Parliamentary Contributory Pension Fund and the House of Commons on the proposed changes.

- Pensions Age March 2009

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