Pension minister Steve Webb and prime minister David Cameron will both get £37 a week more state pension, worth £50,000, from the switch to a single-tier pension, according to figures from Hymans Robertson.
A contracted in worker of the same age earning £14,000 a year will get around £26 a week less, costing £35,000 to replace, the consultancy has calculated.
Webb will pay an extra £6,720 National Insurance for the benefit, while Cameron, who is a year younger that the 48-year-old Webb, will have to pay a further year’s NI, bringing his extra NI bill to £7,200.
These figures are calculated on the basis that Webb was in the DB scheme he was eligible to join in his nine-year stint at the Institute for Fiscal Studies. Webb has refused to confirm whether he was in the IFS’s DB scheme. But even if he was not contracted out for that period, he will still get £10 a week more state pension on account of the change to single-tier, worth around £13,000, as he has been contracted out into the House of Commons scheme since 1997.
Cameron has also refused to disclose whether he was contracted out during his six and a half year stint as director of corporate affairs at Carlton TV in the 1990s.
The TUC has published figures that show private sector workers on £26,000 retiring between now and 2032 will get less from a combination of their private and state pension than they would have got under the current arrangements.
Labour work and pensions shadow Rachel Reeves and pensions shadow Gregg McClymont have both declined invitations to comment on the apparent generosity of the scheme towards the ministers. Labour has not formally opposed the policy in Parliament.
Hymans Robertson partner Chris Noon says: “It’s ironic that the biggest gainers are those who already have decent pensions. Those who don’t currently have any private pension are, by definition, contracted into the state system, and they all lose if they have a long career. The twin reforms of single tier pension and automatic enrolment into workplace schemes are supposed to help them. But for millions the extra pension from auto-enrolment will not make up the state pension lost.”