3.1  Benefits at 1 April 2005. The benefits applicable to MPs and office holders are set out in the Parliamentary Pensions (Consolidation and Amendment) Regulations 1993, as subsequently amended from time to time. Prior to 15 July 2002, the main benefit provided was a pension to members from the age of 65, defined as 1/50th of final pensionable pay for each year of service. Spouses' pensions were generally payable at a rate equal to five-eighths of the member's pension, which corresponds to a spouse's pension of 1/80th of final pensionable pay for each year of service.

  3.2  Accrual Rate of 1/40th. The Parliamentary Pension (Amendment) Regulations 2002 (SI 2002 No. 1807) gave members the option on an individual basis to increase the rate of accrual of their pension from 15 July 2002 to 1/40th of final pensionable pay for each year of future service (with a corresponding increase in the accrual rate for spouse's pension to 1/64th of final pensionable pay for each year of service). Members opting for the higher accrual rate were subject to an increase in the members' contributions from 6% of pay to 9% of pay.

  3.3  Serving members who opted for the 1/40th rate for future accruals were also given the option of backdating their 1/40th accrual service to 5 July 2001 (when the House of Commons voted for the change) subject to payment of additional contributions for the backdating period. As from 1 April 2004, the contribution rate for members accruing benefits at the 1/40th rate was increased from 9% to 10% of pay.

  3.4  New members of the scheme elected or appointed since the increase in the accrual rate was implemented have an irrevocable option, to be exercised at the time of becoming a member. Such members may opt for either the lower accrual rate (1/50th) or the higher accrual rate (1/40th), with members' contributions payable at the rate of either 6% or 10% of pay respectively.

  3.5  Early Retirement The scheme's Normal Retirement Age is 65, but members can draw their pension benefits without any reduction being applied for early payment, subject to being aged 60 or above and age plus service as an MP totalling 80 years or more. These early retirement provisions have been changed prospectively so that only service up to the later of 1 April 2009 and the next General Election after 5 May 2005 counts towards the qualifying period for early retirement. Pension benefits accrued after the later of 1 April 2009 and the next General Election can generally be drawn before age 65, but only subject to a reduction to reflect the early payment. Members who joined the scheme for the first time after 1994 will not generally be able to retire before age 65 without a full actuarial reduction being applied.

  3.6  Partner Pensions Benefits in respect of serving members on or after 3 November 2004 have been extended to include survivor pensions payable to qualifying unmarried partners, as well as to widows and widowers, upon the death of a member. Those survivor pensions will no longer cease upon the subsequent marriage, civil partnership or cohabitation of the surviving spouse or partner. From December 2005, survivors' pensions are also payable to legal civil partners.

  3.7  A summary of the benefit provisions of the scheme at the valuation date is given in Appendix A.

  3.8  Member Contributions During the inter-valuation period from April 2002 to March 2005, contributions from members were paid at the rate dependent on their accrual rate option. Also, if they opted for 1/40th accrual, the date from which they opted for the increased accrual rate to commence affected the start date of the higher contribution rate. The table below describes the contribution rates payable.

  3.9  In addition to the rates above, during the inter-valuation period members who opted for 1/40th accrual to be backdated to 5 July 2001 paid the additional required contributions of 3% of pay for the period from 5 July 2001 to 31 March 2002.

  3.10  Exchequer Contributions. My recommendation following the actuarial valuation in 2002 was that the rate of contributions payable by the Exchequer should be 24% of pensionable salaries from 1 April 2003. From 1 April 2002 to 31 March 2003, Exchequer contributions were paid at the previous recommended rate of 7.9% of pensionable salaries. From 1 April 2003 to 31 March 2005, Exchequer contributions were paid at the recommended rate of 24% of pensionable salaries.

  3.11  Valuation Approach. The General Election on 5 May 2005 resulted in some significant membership changes. Although the Election took place after the valuation date, I have taken account of these membership changes arising from the Election in calculating the funding level and future contribution rates of the scheme.

  3.12  In performing this valuation I have relied on the accuracy of the information provided to me by the secretariat to the scheme's Trustees. The information provided is consistent with the data shown in the accounts and other publicly available sources.