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Government drops MP pension plan Government drops MP pension plan
(19 minutes later)
Ministers have backed down on plans to increase the contribution of taxpayers to MPs' pensions, ahead of a debate.Ministers have backed down on plans to increase the contribution of taxpayers to MPs' pensions, ahead of a debate.
A planned increase had been accepted by all parties in March but the government now says it will accept a Lib Dem plan to freeze taxpayers' contributions.A planned increase had been accepted by all parties in March but the government now says it will accept a Lib Dem plan to freeze taxpayers' contributions.
The government wants to increase MPs' contributions by £60 a month, but the Lib Dems complained the taxpayer would pay £750,000 more than last year. The proposal would have seen MPs' own contributions rise by £60 a month, but the Lib Dems said taxpayers would have paid £750,000 more than last year.
All party leaders have indicated that MPs' final salary schemes must end.All party leaders have indicated that MPs' final salary schemes must end.
In March the main parties endorsed the increase but it was not put to a vote. The cost to the Treasury of MPs' pensions has risen from £9.8m in 2003 to £12m last year. Over that period, MPs themselves were asked to contribute only an extra £700,000.
Frozen contributions
In March the main parties endorsed a plan to increase both MPs' contributions and contributions from public funds, but it was not put to a vote.
BBC political correspondent Laura Kuenssberg said the political mood had changed in the wake of the MPs' expenses scandal and the impact of the recession.BBC political correspondent Laura Kuenssberg said the political mood had changed in the wake of the MPs' expenses scandal and the impact of the recession.
MPs had been due to debate a plan to increase both the amount they contribute to their pensions and the amount taken from public funds. MPs are due to debate the plans on Thursday but the Liberal Democrats planned to put down an amendment, supported by the Conservatives, that would have frozen taxpayers' contributions.
But the Liberal Democrats had planned to put down an amendment, supported by the Conservatives, that would have frozen taxpayers' contributions. In a statement, Downing Street said all parties had previously agreed a recommendation from the independent Senior Salaries Review Body (SSRB) in 2007 about the level at which the public contribution should be capped.
In a statement, Downing Street said all parties had previously agreed a recommendation from the independent Senior Salaries Review Body in 2007 about the level at which the public contribution was capped.
The Lib Dems say it meant the taxpayer's share of funding the generous Parliamentary pension would have gone up from 26.8% to 28.%.
Downing Street added: "Were the [Lib Dem] amendment to be selected, the government would be happy to accept it and consult further.Downing Street added: "Were the [Lib Dem] amendment to be selected, the government would be happy to accept it and consult further.
"In any case, this was always going to be a free vote and the government has asked the SSRB to review fundamentally MPs pensions for the longer term." "In any case, this was always going to be a free vote and the government has asked the SSRB to review fundamentally MPs' pensions for the longer term."
A review proposed in January 2008 was put off by MPs, who voted to delay the inquiry until the cost of pensions hit 20% of their total payroll, which is around £130m.
The Government Actuary's Department had warned the prime minister that the 20% threshold was likely to be breached.
In February 2009 Gordon Brown ordered the review to consider the "full range of options" for reducing the burden to the taxpayer - including increasing the retirement age or ending the generous final salary pension scheme.