MPs’ Pension and Yours
This week on Facebook: Having decided to delve into the realm of pensions it came as no surprise to discover that politicians spend a great effort on their own sinecures but compound the self created pensions dilemma that successive governments have imposed on others.
There is no art which one government sooner learns of another than that of draining money from the pockets of the people. Adam Smith — The Wealth Of Nations,
An article in Money Marketing states that the UK pensions system is like a giant Ponzi scheme and one in which the pension payments made to UK MPs are a part of. Their Contributory Pension Fund (PCPF) is a funded defined benefit (DB) pension scheme managed by trustees in line with scheme rules and any relevant legislation. The PCPF is contracted-out of the additional State Pension and the Independent Parliamentary Standards Authority (IPSA) is responsible for oversight of the MP’s scheme. However, the PCFP is not fully funded and is not independent of the exchequer who makes a contribution¹ guaranteeing that no deficits occur in the scheme.
The exchequer’s guarantee applied to the PCPF² is not available to investors in a private pension and nor is it applicable to the State Pension. Regardless of their political affiliations MPs indulge in deceit and deception regarding your pension but rely on you to protect theirs. The exchequer contribution to the PCPF was more than the MPs contributions in 2016 and more than twice their contributions in 2015, with such a contribution made by the taxpayer MPs can afford their hypocrisy.
Payments on all pensions are part of the welfare budget.HM Treasury’s figures on public spending—which are also used in each Budget—use the much broader category of social protection, which also includes the significant amounts spent on personal social services and admin costs. At £231 billion social protection was the largest public spend in the 2015/16 budget³ (35% of all public spending). The spend on social protection contributes to the total of the budget deficit, a deficit that successive political administrations use for this Ponzi scheme
The Public sector comprises some 50% of the economy that acts as a noose around the economy that strangles competitive industries and entrepreneurship, because one cannot compete against subsidised public sector services that exist purely to accumulate debt. Debt, the prolific mother. (2012)
Monday — The MPs’ goldmine (2008): For the first time, it lays bare the “platinum-plated” pension enjoyed by the country’s MPs – but virtually none of their constituents.
Tuesday — Gold-plated pensions(2009): For employers, the upkeep of these schemes is costly, risky, and complex. But not, at least yet, for the Government is final-salary a step too far it would seem.
Wednesday — MPs’ hidden perk (2015): From last month their exceedingly generous, final salary-linked schemes will be superseded by a less generous system under which their retirement income will be linked to their “career average” salary.
Thursday — Why millions of Britons will never get the £151-a-week new state pension (2015): Retirees on low incomes can claim pension credit, and all workers can also build up extra state pension, formerly known as Serps, now called the state second pension.
Death of retirement (2017): Life expectancy over a 70-year period has increased by around 17 years, so we are faced with a fundamental problem that this is something we should have addressed a very long time ago and didn’t and therefore to address it now makes it much, much more challenging4
²Parliamentary Contributory Pension Fund 2016 (pdf) The Annual Review for the Parliamentary Contributory Pension Fund (PCPF) and the Trustees’ annual report on the pension scheme for 2016.
³Summer Budget 2015 (pdf) Copy of the Summer Budget Report – July 2015 as laid before the House of Commons by the Chancellor of the Exchequer when opening the Budget.
4 Death of Retirement (BBC podcasts) Money Box explores what retirement might look like in the future
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