My Lords, it is important that I declare two interests. First, I had the privilege of being the Member of Parliament for Northampton South for 23 and a half years and I am in receipt of a pension. Secondly, I am a trustee of the Parliamentary Contributory Pension Fund, known as the PCPF, and have been for some years.
It might help your Lordships’ House if I gave a bit of the background to the Bill. The House of Commons Members’ Fund was established in 1939 before there was a pension scheme, which was itself established in 1964. The whole idea of the fund was to help former Members and their dependants who faced financial difficulty. Its original purpose was to provide those former Members, their widows or widowers and orphan children with a discretionary grant in lieu of a pension. Subsequent amendments over time allowed grants to be made to alleviate hardship, gave trustees greater discretion and introduced an “as of right” payment for certain Members who left the House before the Parliamentary Contributory Pension Fund was established.
There have been two previous attempts to bring the fund up to date, made by my colleague, Peter Lilley MP, who is a trustee of the members’ fund, but those both failed. On 4 November last year, Sir Paul Beresford, to whom I pay tribute, presented under its previous title the Bill that is before us today. He explained that the Bill would empower trustees to cease requiring contributions from Members and to return surplus funds to the Treasury. It would extend the class of beneficiaries to assist all dependants of former Members who experienced severe hardship. It would also allow one of the trustees to be a former Member of Parliament.
It is not my intention to go through all the clauses of the Bill, but it is right just to specify the three categories of beneficiary that would arise from it. First, there are the “as of right” recipients. As I said, there were no pensions prior to the PCPF being set up in 1964. Thereafter, those who left the House from October 1964 onwards and had served 10 years or more were entitled to a pension for themselves or their widow or widower. The fund pays those who left the House earlier or without the necessary 10 years’ service and their widow or widower as an “as of right grant”. Currently, that is set at £6,132 per annum for ex-Members and approximately £3,835 for their widow or widower.
The second category is widows. Widows can receive top-up pensions. 1n 1991, the PCPF pension to the widow or widower was increased from one half of the Member’s pension to five-eighths, but it applied only to Members who had left after 1988. The trustees decided to make good the apparent oversight of widows or widowers of Members who had left before this date by making a discretionary payment from the fund to top up their PCPF pension already in payment from one-half to five-eighths of a Member’s pension.
The final category is hardship/discretionary grant recipients, who receive either a one-off or a periodic payment which is paid entirely at the discretion of the trustees where they consider that an individual satisfies the requirements of the legislation. The legislation allows the trustees to make periodic or other payments to the widows, widowers or orphaned children of former Members as those trustees think fit, having particular regard to the circumstances of the person to, or in respect of whom, the payments are made. Essentially, these payments are made on a financial hardship ground. Your Lordships’ House, particularly its former Members of Parliament, will understand that these demands, given the existence of the current pension fund, have reduced substantially. At this time, just under 50 people are in receipt of one or other of the three categories that I have mentioned.
I turn to some of the key points that arise from the Bill. Your Lordships’ House needs to be clear that this is not a government Bill, nor is it a government hand-out Bill; it is a House of Commons management Bill. The Bill is not new—as I have already said, two earlier attempts fell, principally for lack of time.
I imagine that your Lordships’ House will be interested in some of the figures. Payments in the last financial year came to around £137,000. Against that, the fund stands now at just over £7 million. At present, the fund is drawn from the compulsory contributions from Members, earnings from its investments and an
annual contribution from the Treasury of £215,000, whereas the Members’ contributions amount to £15,000 per annum.
The Bill will remove the requirement under existing primary legislation for Members to make monthly contributions of £2. However, the Bill also enables the trustees to recommend resumption of contributions if they should ever be needed in the future, at no more than 0.2% of pay. The trustees also have the right, if they agree, to return any surplus funds to the Treasury, and I understand that they have requested this discretion.
The Bill will extend the class of beneficiaries to assist all dependants of former Members who experience severe hardship. It will also remove the requirement for trustees to be current MPs. I am sure that the House will agree that it seems sensible for the trustees to ask, for example, for the Association of Former Members of Parliament to nominate one trustee. In addition, that will enable the trustees to get over the problem that arises when, at a general election, a number of Members who are trustees lose their seats. The Bill will allow such former MPs to remain as trustees temporarily until they are formally replaced. Finally, in Clause 9, for efficiency reasons, the Bill will amalgamate various Acts.
I turn to the deduction from Members’ salaries, a point I suspect former Members always find interesting. If we go back in time to 1939—I doubt anyone here can remember that—the provision then was for a £12 per annum contribution. That was increased to £18 by a resolution of the House on 18 July 1957 and to £24 on 17 May 1961.