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MPs may lose final salary pension Report by year end on MP pensions
(30 minutes later)
MPs could lose their final salary pension scheme after Prime Minister Gordon Brown asked for a review to look at the merits of alternatives. A review of MPs' pensions - which could see them lose their final salary scheme - is to report by the end of the year.
The Senior Salaries Review Body is set to report by the end of the year. The review, by the Senior Salaries Review Body, was ordered by Prime Minister Gordon Brown after concerns about the growing cost to taxpayers.
Alternatives being looked at to reduce the cost to the Treasury of the current scheme are "defined contribution or money purchase arrangements".Alternatives being looked at to reduce the cost to the Treasury of the current scheme are "defined contribution or money purchase arrangements".
The Conservatives and the Lib Dems both want the final salary scheme closed.
MPs have already backed changes which cut the contribution to their pension from taxpayers by 2.9% or £1.4m a year.MPs have already backed changes which cut the contribution to their pension from taxpayers by 2.9% or £1.4m a year.
But Commons leader Harriet Harman said any further changes would be put on hold until the review body made its recommendations.
"The government's decision on any further proposals will be taken after the publication of the review," she said in a statement.
Mr Brown ordered the review in February to look at ways of reducing the £12m a year cost to taxpayers of the MPs' pension scheme.
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 review was triggered when the Government Actuary's Department warned the prime minister that the 20% threshold was likely to be breached.
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.
MPs' contributions to their pension scheme are set at 10% of their salary and the current "accrual rate" - the proportion of salary received for each year of service - is 1/40th.