PENSIONS

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MPs are to fight attempts to make them pay more into their pension pots. MPs who run the parliamentary pension scheme are to defy a government order that they should face the same reforms to their pensions as other public sector workers, arguing that they are already among the highest contributors in the public sector, paying 11.9% of their salary, and saw a rise in contributions only two years ago. The leader of the Commons, Sir George Young, told parliament he would pass the issue to the Independent Parliamentary Standards Authority, completing a process to remove responsibility for parliament to set its own pay and remuneration following the expenses crisis.

He said, "Given the failure of self-regulation, which so damaged parliament's reputation, this represents a significant step in drawing a line under the problems of the past and rebuilding public confidence." He added, "We have consistently made clear that parliamentary pensions must be reformed in the light of the Hutton Report's findings and subsequent application to other public service schemes. There is no case for MPs being treated differently from other public servants." But Brian Donohoe MP who chairs the trustees of the parliamentary scheme said they would argue for less than the suggested 5%.

He said, "There's an awful lot to be negotiated. MPs have already paid an additional 1.9% and that was increased about 25 months ago. If people know how much we pay compared with elsewhere I think we can make a case. We have to set an example to the country but we don't have to capitulate to unreasonable demands. My job is to represent members of the scheme." The government has said it is to increase pension contributions by an average of 3.2 percentage points for public sector workers, but those earning under £18,000 will be protected, meaning high earners will pay more.

The chief secretary to the treasury, Danny Alexander, has said the highest increases would be capped at five percentage points, which under current conditions would probably be applied to MPs, who earn £65,738 a year. They will also move from a final salary scheme to to a "career average" scheme. In practice this will only affect ex-ministers, as ordinary MPs have a flat-rate salary. The government has already accepted that a special case may have to be made for members of the local government scheme which, like the MPs scheme, is self-funded and has a large investment fund.

The MPs' fund, however, is about to go into the red because so many MPs retired at the last election and began drawing their pensions. Mark Serwotka, general secretary of the PCS union, which has been at the forefront of the strikes against the pension reforms, said, "While the unreconstructed Tory millionaires in the cabinet are seeking to force public sector workers to pay more and work longer for much less in retirement, it seems MPs remain reluctant to see their own pensions cut. If this was out of empathy for public servants it would be welcome, but I suspect it has more to do with protecting their very generous arrangements that so far have received little scrutiny." (Source: The Guardian, Jul/11)

The annual cost of pensions for thousands of EU bureaucrats will soar to £1.3billion over the next three years. British officials uncovered confidential documents detailing a growing black hole in the EU civil service retirement fund. European Commission figures showed that UK taxpayers will be contributing £177million a year towards Brussels pensions by 2013, a 16% increase. The documents estimated that the annual cost will double to £2billion by 2040, with Britain’s contribution rising to £350million. The cash funds pensions averaging £57,194 a year. The documents, prepared last year, said the average retirement age for EU civil servants was 60.

This is at a time when the British pensions system is in crisis and the EU has demanded that member states raise the retirement age to 70. Euro MP Nigel Farage, leader of the UK Independence Party in the European Parliament, said, “This will be another millstone around our children’s and grandchildren’s necks. These people can increase our future liabilities, without having to suffer the consequences.” And Mats Persson, of the think-tank Open Europe, said, “The EU’s pension system is unnecessarily generous, and completely out of step with demographic realities and the austerity measures facing public sector workers across Europe. The UK government must push hard for reform.” (Source: Daily Express, Aug/10)

Pensioners are getting an improvement in their meals on wheels service but the cost has increased by 78%. Although a number of them are now being given a hot meal every day of the week, and the choice from a menu, the price has increased from £1.40 to £2.50. More than 400 people in Derby use meals on wheels and, so far, about 15 people have been introduced to the new service. The remaining 385 can apply to have it but first must be reassessed by social services.

Pensioners can choose each day which dish they would like from a menu of four hot meals, including a vegetarian choice, and two puddings. Previously, they could have only one hot meal on any two days between Monday and Sunday. Frozen meals were provided the rest of the time. A council spokeswoman said price rise would bring in an extra £40,000 a year that would be ploughed back into adult social services. She could not say how or what services could be improved. (Source: Derby Evening Telegraph, Mar/07)

A £620m black hole has opened up in the main Derbyshire council employees' pension fund, and tax payers will have to foot some of the bill. Figures obtained by the Evening Telegraph show that the Derbyshire Pension Fund had £1.023bn on March 31, 2003 - £620m short of its target amount. The pension is paid into by 29,800 employees from Derbyshire County Council, Derby City Council and the county's eight district and borough councils.

On March 31, there were 17,000 pensioners claiming from the fund, plus 8,500 deferred pensioners, who have left local government and will draw a pension once they reach 60 or 65. As employers, the councils are increasing their contributions to make up the shortfall, some of which will come from the Government and business rates. But tax payers will also have to help meet the gap through increased council tax bills. The Derbyshire Pension Fund, managed by the county council, is valued every three years by an actuary in line with Local Government Pension Scheme regulations.

The last complete valuation was on March 31, 2001. Then, the fund's total assets - the amount in the fund - were £1.245bn. Its total liabilities - what it can expect to have to pay out - were £1.415bn. The liabilities are assessed by actuaries, financial statisticians who take into account workers' ages, gender, length of service and other factors. Steps were put in place to try to meet the 12% gap by increasing council contributions. But the latest figures show that there is still a shortage and total liabilities have grown to more than £1.6bn.

Councillor John Powell, deputy leader of the county council, said that the majority of council pension funds in the UK were affected in this way by the regulations, which measure a fund by comparing its current status with a "snapshot" taken on one specific day. The next "snapshot" and full valuation of the Derbyshire Pension Fund will be on March 31, 2004. Mr Powell said, "It is important to emphasise that the benefits for contributors and pensioners are not at risk. Disappointing stock market returns over the last two to three years have certainly had a detrimental effect on asset values."

Council tax payers have bailed out their local authority's poor pension fund performance in the past. Mr Powell said, "Arising from the valuation of the fund in March, 2001, the county council's employers' contribution for the current financial year increased by £1.7m, of which £500,000 came from council tax." One county council employee said, "What they're planning seems the fairest way forward. It's better for the employers' contributions to go up." The fund does not include the county's teachers, who have their own pension scheme.

Rolls-Royce has a £1.1bn black hole in its pension fund and expects its employees, not taxpayers, to fill it. How is the council different?

Millions of former Soviet citizens who can come to Britain from May 1 2004 will qualify for UK pensions whether or not they have paid any tax or National Insurance contributions. There was anger as it emerged the deal is worth £105.45 a week for all who apply, nearly £26 MORE than the single state pension. The benefit beano is open to people in ten eastern European states with 73million people. The bill could run into billions at UK taxpayers’ expense, before housing and health costs. Britain and Ireland are two EU countries offering full access rights to the ten nations when the Union expands to 25 members but Germany, France, Italy, Spain, Austria and others have BANNED benefits for seven years.

The Department of Work and Pensions confirmed that any pensioner arriving in Britain legally with no income is entitled to income support. That amounts to £105.45 per person and £160.95 for a couple. The state pension, available to those who have paid tax and NICs all their lives, is £79.60, or £127.25 per couple. Robert Whelan, of the Civitas think tank, said the offer puts Britain’s whole system of contributory rights at risk. He said, “This is a terrible scandal. It puts people who have paid all their lives in tax and NICs on the same level as people who have contributed nothing. It is a mistaken policy which will fuel resentment. This will increase the numbers wanting to come here.” Ruth Lea, of the Centre for Policy Studies, said, “This makes a mockery of the system.”

The basic state pension is to rise to £82.05 a week, as the Government claims "remarkable strides" in tackling poverty among the elderly. The annual uprating in line with inflation will see the single person's payment go up £2.45 from April 2005. A couple's pension will rise by nearly £4 to £131.20. Work and Pensions Secretary Alan Johnson told MPs 1.8million pensioners had been lifted out of "absolute poverty" since 1997.

He said, "We have made remarkable strides in tackling the pernicious pensioner poverty which we inherited." Its eradication would remain a priority. Means-tested pension credit, linked to average earnings, will give a single pensioner at least £109.45 a week and a couple £167.05. Mr Johnson said more than 3.1million pensioners now claim the payment. Take-up for poorer OAPs is more than 80%. Overall, he added, the average pensioner household would be £1,350 a year better off in 2005/6 that under the 1997 system. (Source: Daily Mirror)

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