John Penrose

Conservative Party | Weston-super-Mare

Pensions

31 January 2006

John Penrose (Weston-super-Mare) (Con): Does the hon. Gentleman agree that there is something unexpected about the Government's apparent commitment to final salary schemes in the public sector, given that Lord Turner has said that the people who end up on high final salaries—typically the few most senior people in a final salary scheme—will have paid the smallest percentage of their lifetime earnings to achieve their final pension payment? That does not seem entirely fair and I am surprised that more Labour Members have not picked that up.

Mr. Laws: I agree with the hon. Gentleman. The Government have obviously tried to address that to some extent by looking at career averaging. However, in some public sector schemes—not all, in fairness; the local government scheme is clearly not comparable with some of the others—the effective contribution rates, which after all involve the taxpayer, are many multiples of what we see in defined contribution schemes, and even double some of the defined benefit schemes in the private sector. I would have thought that many people, even in the public sector, understood that unfairness. Of course they want to see decent pensions in the public sector, but they understand that we cannot rely solely on the taxpayer to pick up the bill. People in the public sector, including Members of Parliament, might have to decide whether they want to receive a less generous pension or to make larger contributions to their pension to ensure that it can be delivered.

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