Our retiring House of Commons leader, Speaker Martin’s, premature retirement at the age of 63 will be really amply cushioned by us good old taxpayers with a pension fund worth just under £2.1m. That’s how much experts calculate that ordinary people would have to save to buy a pension annuity – or guaranteed income for life – of around £71,000 a year, or 50% of the Speaker’s salary.
This is the figure given in official documents dated April, 2008, but the current figures aren’t readily available, apparently. What we do know for sure is that the part of the Speaker’s pension entitlement that exceeds other MPs’ retirement funds requires him to pay no contributions. And, the Speaker would be entitled to receive 50% of his salary as pension, regardless of how long he was in the post. Even by the (interesting) standards of the House of Commons, this is a remarkably generous pension scheme.
Britain’s private sector retirement funds used to exceed all those in the rest of Europe in 1997 before the then Chancellor Gordon Brown used his first budget to impose £5 billion a year tax on these funds. Since then, most traditional final salary arrangements, which MPs continue to enjoy, have been closed to most workers in the private sector. Thank you, Gordon.
The average pension fund savers use to buy an annuity today is about £47,000. That’s less than a fortieth of the Speaker’s pension fund and, with full index-linking for a man of his age, would generate an annual income of around £1,673 a year before tax, at current annuity rates.
Speaker Martin’s fabulous pension fund reminds us that MPs might have been more careful to preserve our pension arrangements, and less keen to tax them, had their own comfort in old age depended on it, and they had to go out and get annuity quotes like the rest of us at retirement.