The recommendations on new pension and grants rules for MSPs and office-holders were published by the Scottish Parliamentary Pension Scheme Committee today.
The cross-party committee was established to update pension and grants rules in the light of significant legislative changes that have been made at a UK level since 1999. The committee has made a number of detailed recommendations and set out proposed new rules updating the Pensions Order and the Grants Order.
Committee Convener Alasdair Morgan MSP said:
“Our Committee has set out detailed proposals and a draft bill to implement these changes. The next step is for Parliament to debate the report and its associated bill.”
The cross-party committee recommended the following changes in their report:
Trustees should be appointed to manage and administer the funded pension scheme instead of the current situation where the SPCB are both employers and trustees. This would also bring the Scottish Parliament in line with Westminster and the Welsh Assembly.
Members will have the opportunity to accrue pension rights more quickly but they must fully fund the additional cost.
The qualifying period of 15 years actual Parliamentary service before early retirement should be removed so that early retirement on a reduced annual pension is available for all ex-members aged 55 and over. Members who are no longer serving MSPs or officeholders should be able to retire from age 55, subject to an actuarially neutral reduction of 4% to their pension for each year below age 65. This addresses age discrimination questions, which may have arisen under the current rules.
The scheme adopt a two tier approach to ill-health pensions for serving members and officeholders, based on the severity of the ill-health, and that periodic reviews should follow all ill-health pension awards.
An MSP may exchange up to 25% of their pension for a lump sum as permitted by the Finance Act 2004.
The death in service lump sum benefit be increased from three to four times salary in line with Westminster and the Welsh Assembly.
The existing arrangements for the First Minister and Presiding Officer should be closed to any new incumbents. The First Minister and Presiding Officer pension provisions should be the same as all other officeholders under the new scheme rules. These are consistent with the other devolved administrations and similar to proposals being considered at Westminster following a report by the Senior Salaries Review Board. A one-off re-settlement grant should be available to future First Minister and Presiding Officers who no longer qualify for the previous pension arrangements of these offices.
The amount of resettlement grant payable should be maintained within the current minimum and maximum limits with the equivalent of six months’ salary for each MSP up to the current maximum entitlement of 12 months’ salary. The amount payable would be calculated from the minimum by one month for each full year of service by an MSP beyond six years. An MSP may reach the maximum grant by serving three terms instead of the current four terms.
- The period which must elapse after holding any of the officeholder posts - including government ministers, Lord Advocate and Solicitor General - before the officeholder severance grant is payable should be extended from three weeks to three months.
Parliamentary debate of the report and the proposal for a committee bill is expected before Parliament rises at the end of June. If the report is approved by Parliament a committee bill can be introduced to give effect to the recommendations.
Once introduced, the committee bill will be considered by the Finance Committee at stage 1 before being debated by Parliament. If agreed it would then be allocated to a committee established specifically to scrutinise and consider amendments at stage 2 before continuing to stage 3 consideration by the full Parliament.
The Scottish Parliamentary Pensions Scheme Committee (SPPS) was established on 27 June 2007 specifically to consider the existing Scottish Parliamentary Pensions Scheme rules. Its remit was extended on 28 November to include consideration of the Grants to Members and Officeholders Order.
Committee members are Convener Alasdair Morgan MSP, Deputy Convener Peter Peacock MSP, David McLetchie MSP and Hugh O’Donnell MSP. The committee met on a total of 9 occasions. Once the Parliament has considered the committee’s report and concluded consideration of any committee bill that follows the SPPS will be disbanded.
The existing Pensions Order can be found in The Scotland Act 1998 (Transitional and Transitory Provisions) (Scottish Parliamentary Pensions Scheme) Order 1999. The existing Grants Order can be found in The Scotland Act 1998 (Transitional and Transitory Provisions) (Grants to Members and Officeholders) Order 1999. Both Orders are Transitional provisions made following recommendations by the Senior Salaries Review Board prior to the establishment of the Scottish Parliament. Both were always intended for replacement once the Parliament was established.
Since 1999 there have been significant legislative changes at a UK level which have affected all occupational pension schemes. The most important are the Finance Act 2004 and the Pensions Act 2004, though equalities legislation has also developed quite rapidly. Other legislative changes requiring action have introduced Pension sharing on divorce and civil partnership legislation. Changes require an Act of the Scottish Parliament to implement and must be made by April 2011.