HOLYROOD moved yesterday to scrap the generous pension arrangements for first ministers and presiding officers that gave Henry McLeish a pension of £34,000 a year for life from the day he stood down in 2001.
When the Scottish Parliament was created, many of the rules mirrored those in place at Westminster, one of which was to allow former prime ministers to claim half their final salary every year, for life, from the moment they left No 10.
But the aw
ard of £34,000 a year to Mr McLeish from the day he quit as first minister – particularly as he had been brought down by a financial scandal – caused uproar and brought calls for a re-examination of the pension arrangements for MSPs and ministers.
That started last year and yesterday, the Scottish parliamentary pension scheme committee made its recommendations, which will have to be approved by MSPs before they can be brought into force.
They called for the scrapping of the special pension schemes for first ministers and presiding officers, although not for the present incumbents: Alex Salmond and Alex Fergusson will benefit in the same way as their predecessors.
At the moment, MSPs' pensions are based on 1/50th of their final salary for each year of service and a 6 per cent contribution rate.
The committee suggested that MSPs be given the option of accruing future benefits at either 1/50th or 1/40th of final salary but that the extra cost of the 1/40th option should be met by increasing the contribution rate to 11 per cent.
Rachel Vahey, a pensions expert from Aegon, said: "These changes look like tinkering around the edges to bring the MSP pension in line with other public-sector schemes. Of course, the headline is that a first minister will be entitled to the same pension as his other colleagues. However, he has no reason to feel hard done by. A public-sector final-salary scheme is still something to aspire to and is certainly a lot more generous than many people's pension plans."
She added: "The other changes are a mixture of improvements – making it easier for MSPs to retire early and giving their families more generous death benefits. But all in all, still a very attractive package."
Key points of planned payments cut backs MSPs and ministers currently have among the most generous pension arrangements in Britain, but some of this is going to change.
The committee looking into the issue has recommended a number of changes. These include:
• Scrapping the special pension arrangements for first ministers and presiding officers which gives them half of their salary every year for life from the moment they stand down from their jobs.
Under the current salary structure, this will give Alex Salmond £38,453 a year and Alex Fergusson £19,948 a year.
In future, said the report, first ministers and presiding officers should receive a one-off resettlement grant of six months of their salary.
• Giving MSPs the option of better pension provision, but only if they pay for it.
At the moment, MSPs' pensions are based on 1/50 of their final salary for each year of services, and a 6 per cent contribution rate.
The committee recommends that MSPs be given the option of accruing future benefits at either 1/50 or 1/40 of final salary. The extra cost of the 1/40 option should be met by increasing the contribution rate to 11 per cent.
• There should be an end to the qualifying period of 15 years for early retirement.
Early retirement should instead be available for all former MSPs aged 55 and over.
• Death-in-service lump sum benefits should be increased from three to four times salary, in line with Westminster and the Welsh Assembly.
• Trustees should be appointed to manage the pension scheme, instead of the present situation where the Scottish Parliament Corporate Body is both employer and trustee.
• There should be a new, two-tier approach to ill-health pensions for serving members and officeholders.
This would be based on the severity of the ill-health. All ill-health pension awards should also be reviewed regularly.
• MSPs should also be able to exchange up to 25 per cent of their pension for a lump sum.
The full article contains 728 words and appears in The Scotsman newspaper.
