April 9, 2008
Should we halve MPs’ pensions?
This will not please our elected representatives.
John Ralfe, the former head of corporate finance at Boots and an indefatigable apostle for the cause of trimming MPs’ “outrageous” pensions, has just launched his latest assault.
In a submission to the Sir John Baker’s review of MPs’ pay, he has analysed the true cost to the taxpayer of the parliamentary pension scheme. His conclusion: for the scheme is to truly represent its stated cost to the public purse, it should be cut in half.
The cost of the MPs scheme is double the official estimate because the government actuary uses aggressive and over-optimistic assumptions about longevity and future returns from the stock market, according to Mr Ralfe. (This is explained in more detail here.)
In his submission, Ralfe tantalisingly outlines what we would need to take away from MPs to rectify the imbalance.
He says we should reduce the annual pension accrual from 1/40th to 1/60th (which basically trim the pension from about £1,500 a year to £1,000), move from final salary to career average, and impose a 2.5 per cent inflation cap. This will bring MPs in line with most other pension schemes in the country.
Can you hear the pips squeaking?
A democracy is only as good as the people who are elected to govern it. If we want the very best people who represent a full cross section of our society, then we must give them the market rate for the work they do. The labourer is worth her hire.
Posted by: John Woodhouse | April 9th, 2008 at 2:38 pm | Report this commentThe problem with our current system of choosing potential politicians is that we do not know how intelligent or honest they are and therefore whether they are worth the money we pay them. We should have a minimum intelligence test that shows how able they are to think through problems. My suggestion is a Killer Sudoku - that would sort out the idiots. I wonder whether Tony Blair would have passed that test?
Posted by: Mrs. Sally Copperwaite | April 11th, 2008 at 8:46 am | Report this commentJohn Ralfe is to be applauded for his research on MP’s pensions and for exposing the fundermental differences in the way that they have been calculated. (Is this another cover up similar to that involving their expenses?) Their preferential treatment is not healthy for democracy and it places an unfair burden on future generations including that of our children
Posted by: David Starkie | April 11th, 2008 at 9:29 pm | Report this commentI am interested to know why you describe John Ralfe’s analysis as the “true” cost of MP’s pensions, when his method is contrary to that probably used by every pension scheme in the country.
In reality Mr Ralfe is just using the MP’s scheme as a cheap target to propagate his real message that pension schemes should invest in bonds. Unfortunately for him, since his time at Boots, he has failed in convincing the majority of this point of view. Whilst he does have some interesting arguments, I suggest he is best debating these sensibly in the relevant arenas, rather than resorting to political spin tactics like these.
For the FT to present his views as mainstream is misleading.
Posted by: Geraint Fellows | April 12th, 2008 at 4:53 pm | Report this comment