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IPSA blog > Month of ideas > Posts > Dr Ros Altmann, Director-General of the Saga Group - What should MPs receive by way of salary and pension?
 

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June 21
Dr Ros Altmann, Director-General of the Saga Group - What should MPs receive by way of salary and pension?

Salary: Setting appropriate levels of senior executive compensation is currently a high profile, emotive issue and salary benchmarking for a role without proper parallels is not easy. However, in my view, MPs salaries are much too low.

I do not consider 'multiples' of average salary a relevant benchmark to use, but finding comparators for suitable pay and benefit levels for MPs involves subjectivity and judgment. It is important that MPs pay reflects their responsibility and compared with senior public sector roles, or high-level corporate executives, MPs £64,500 salary seems inordinately low.  Senior local government roles, corporate managers and senior officials, earn around £80,000 a year, head teachers and senior Directors earn over £150,000 - MPs duties are surely more responsible than these roles.  On call at all hours, running surgeries for constituents, representing tens of thousands of people and making our legislation. 

MPs salaries must be sufficient to ensure we can attract high quality people to stand for office.  I do not believe it is reasonable to suggest that MPs should be unconcerned about earning appropriate salaries because their job is a 'privilege'.  They should be properly rewarded for their work, which is so important to all of us.  Of course, we would not want people standing as MPs just to earn high salaries, we would like to think they are motivated by public duty, but that surely applies equally to other senior public officials in local and quasi-Government roles who are paid significantly more than our Members of Parliament.  The current low salary level probably contributed to the expenses scandals which undermined public confidence in Parliament.  This must not happen again. 
 
I suggest a figure of at least £100,000 for basic pay would be far more appropriate to MPs levels of responsibility, plus a further £5,000-£10,000 a year for those who Chair a Select Committee.  This figure should incorporate and, therefore, replace the current additional benefits such as 'redundancy' payments for MPs leaving Parliament for any reason.  Currently, these pay 50-100% of salary, depending on length of service, with the first £30,000 tax-free, but should be incorporated into a significant salary increase instead.

 
Pensions: MPs' pension benefits are virtually the most generous in the country.  They accrue 1/40th of salary each year (if they pay 10% contributions) and can get a pension of half their final salary after only around 20 years as an MP.  Taxpayer contributions to these pensions will be worth approximately an extra 40% of salary, amounting to over £25,000 a year.

I suggest an alternative approach for MPs pensions.  A pension contribution - of £25,000 a year - should be added to MPs base salary, and paid into a new defined contribution replacing the current defined benefit scheme.  This would help MPs better understand the issues facing the majority of the population who will only have DC pensions.  So far, MPs have been cushioned from the pension changes affecting most private workers.

Dr. Ros Altmann

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