Ministers to pay more into pensions

Updated: 

File photo dated 03/05/10 of two women walking along the beach in Bournemouth as one in 12 people planning to retire this year will still be paying off their mortgage. PRESS ASSOCIATION Photo. Issue date: Friday January 24, 2014. Prudential, which carries out research each year to gauge the state of people's finances as they approach retirement, found that one in six (17%) people ending their working lives in 2014 will still be burdened with some form of debt, including mortgages, credit cards or personal loans. Some 8% of those planning to retire in 2014 said they still have not fully paid off their mortgage and around 10% still have credit card debt piled up. On average, those who still have some form of mortgage and/or non-mortgage debt owe ?24,800, although this figure is around one fifth (21%) lower than the typical debt in 2013 of ?31,200, researchers found. Across Britain, Scotland had the highest rate of people retiring this year with debts outstanding. Nearly one quarter (24%) of people retiring in 2014 there said they would have some form of debt. See PA story MONEY Retire. Photo credit should read: Chris Ison/PA Wire

Ministers' pension contributions are being pushed up by hundreds of pounds a year to share the pain of the public sector.

David Cameron, his Cabinet and Ed Miliband face paying 1.2 percentage points more of their salaries into the retirement schemes.

Ministers of state will have to pay an extra 0.8 percentage points from April, while more junior government members will see a 0.5 percentage point increase.

Cabinet Office minister Francis Maude has said: "The Ministerial Pension Scheme was not covered by Lord Hutton's recommendations, but I consider it appropriate that its members face similar changes."

The new rates do not cover Commons Speaker John Bercow, who has declined to follow the example of successive Prime Ministers and Lord Chancellors by giving up his traditional non-contributory pension - equivalent to half his salary. Mr Bercow has, however, said he will not draw the income until he is 65.

It is the third time that ministerial contribution rates have been pushed up since 2012.

Mr Maude said top-ranking ministers were now paying six percentage points more for their pensions than at the start of the parliament.

In total they will now contribute 17.9% in order to receive a 40th of their average salary for every year in office. For a Cabinet minister earning £134,000, the extra 1.2 percentage points out of the government element of their salary is equivalent to around £800 a year.

Ministers of State will be contributing 15.9%, and more junior ministers 14.4%.

The retirement provision - which can be taken at age 65 - operates alongside the gold-plated contributory pensions available to MPs.

Mr Maude added: "The amendment scheme will also make provision that members who are part of a same-sex marriage will be treated in the same way as members who are part of civil partnerships, in line with the Marriage (Same Sex Couples) Act 2013 and the arrangements for same sex marriage recognition in other public service pension schemes."

7 ways to improve your retirement

7 ways to improve your retirement