Hats-off to the FT for highlighting that at the same time as Rachel Reeves, the chancellor, is strong-arming pensions to invest more in the UK, the MPs’ own pension scheme has just a tiny percentage of its £855mn assets in UK equities (“MPs’ pensions make ‘mockery’ of push to buy British stocks”, Report, December 13).
But it gets worse. The MPs’ scheme is also holding £90mn — over 10 per cent of its assets — in high-risk “junk bonds” rated BB and below, way out-of-line with other pension schemes, which requires explanation (see page 59 of the MPs’ pension scheme for a breakdown).
Taxpayers also deserve a full breakdown of the annual costs of the Byzantine investment arrangements. Astonishingly, the published investment management costs of £1.3mn don’t include the “pooled investment vehicles” — 80 per cent of assets — which the trustees say, with a straight face, are “not separately provided”.
Dame Meg Hillier (Labour) and Dame Harriett Baldwin (Conservative), the current and former chairs of the influential Treasury select committee, are both trustees. Can they use their reputation for asking awkward questions to get the fund managers to provide the total costs?
Meanwhile, MPs still earning a generous gold-plated pension, guaranteed by taxpayers, which most of their constituents can only dream of, should be moved to defined contribution (DC) pensions.
As well as reducing cost and risk for taxpayers, it would also kick-start the reform of other public sector pensions.
John Ralfe
John Ralfe Consulting, Hognaston, Derbyshire, UK
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