Tuesday 15 December

                          WRITTEN MINISTERIAL STATEMENT

Leader of the House of Commons

Parliamentary Pensions

Leader of the House of Commons and Lord Privy Seal (Rt. Hon Harriet Harman MP): The Government is committed to providing public service pension schemes that are affordable and sustainable in the long term, consistent with the principle of fairness for all taxpayers and between generations.

On 3 December I laid before Parliament amendments to the Parliamentary Pensions (Consolidation and Amendment) Regulations 1993.  These amendments will bring in the cost-saving changes to the Parliamentary Pension Scheme which I announced in my statement of 31 March 2009 in accordance with the January 2008 recommendations of the Senior Salaries Review Body endorsed by the House on 24 January 2008. The package is judged by the Government Actuary to produce savings of 2.9 per cent. of payroll, which will reduce the Exchequer contribution to the scheme by approximately £1.4 million a year.

The House endorsed the cost-saving package on 25 June 2009 and also agreed that further changes should be brought forward to cap the Exchequer contribution for 2009-10 not at the 28.7 per cent of payroll level recommended by the Senior Salaries Review Body, but at the lower 2008-9 level of 26.8 per cent.

At request of the Prime Minister, the Senior Salaries Review Body is currently undertaking a fundamental independent review of the Parliamentary pension arrangements.  The Prime Minister has asked the Senior Salaries Review Body to consider the full range of options for reducing the Exchequer contribution and to consider, among other things, the merits of defined contribution or money purchase arrangements. The Senior Salaries Review Body aims to conclude its report by the end of the year. The Senior Salaries Review Body will take into account the cost-saving changes we have made, but its Chairman has expressed concern that any proposals by the Government to make further such changes at this time could conflict with the Senior Salaries Review Body's recommendations and might appear to compromise its review.  The Government's decision on any further proposals will be taken after the publication of the review.  Where applicable, those proposals will be informed by the Senior Salaries Review Body's recommendations and will, in compliance with the House of Commons' resolution of 25 June, have the effect of freezing the Exchequer contribution for 2009-10 at the 2008-09 level as a percentage of payroll.