4.1  Appendix B summarises the changes in membership of the scheme during the period from 1 April 2002 to 1 April 2005. The further changes that resulted from the General Election are summarised at paragraph 4.10 below.

  4.2  Members of Parliament. 655 MPs were members of the scheme on 1 April 2005. The number of scheme members is fewer than the number of Parliamentary seats because MPs who have not taken up their seats in the House of Commons are not eligible to join the scheme. Because of a reduction in the number of Parliamentary constituencies, the number of elected MPs was reduced from 659 to 646 at the 2005 General Election, of whom 641 are members of PCPF.

  4.3  The average pensionable service for MPs (including service credited from transfers in from other pension schemes and additional years of service purchased by members) increased from 13.5 years at the 2002 valuation to 16.8 years at this current valuation. Following the General Election in May 2005 the average pensionable service for MPs reduced to 12.9 years.

  4.4  Deferred Members. On 1 April 2005, there were 176 former MPs and office holders who were not yet in receipt of pension, but who retained an interest in the scheme in the form of an entitlement to deferred benefits, generally coming into payment at age 65. This compares with 232 deferred members as at 1 April 2002. The decrease in the number of deferred members is because there was no General Election during the inter-valuation period, so that very few members entered deferred status, whilst a number of deferred members commenced to draw a pension from the scheme. Including cost of living increases up to the valuation date, the average amount of deferred pension to which former members were entitled was approximately £10,900 a year.

  4.5  Office Holders. On 1 April 2005, there were 143 ministers and other office holders who were actively participating in the supplementary scheme. This number has increased significantly from 116 at the last actuarial valuation because Select Committee Chairmen became entitled to participate in the supplementary section of the scheme from 26 September 2003.

  4.6  In addition to the current office holders, there were 122 former office holders, who were still Members of Parliament, who had actively participated in the supplementary scheme in the past. Those MPs will be entitled to a supplementary pension when they leave the House of Commons.

  4.7  Salaries. During the inter-valuation period the annual salary for Members of Parliament increased from £55,118 as at 1 April 2002 to £59,095 as at 1 April 2005. The pensionable payroll for MPs was £38.7 million at the valuation date. The pensionable payroll for office holders was £5.8 million at the valuation date, giving a total pensionable payroll for active members of the scheme of £44.5 million.

  4.8  Pensioners. In the inter-valuation period, the number of pensioners increased from 745 to 779. These figures include pensions payable to dependants of deceased former members and pension payments that are required to be made to some current MPs. Pension schemes such as PCPF, which are contracted out of the earnings-related additional pension of the State Pension Scheme, are generally required to start paying a statutory level of pension when a member who has been a member since 1997 or earlier attains the age of State Pension Age plus five years (ie age 70 for men, age 65 for women), even where the member is continuing to accrue benefits under the scheme. At the valuation date there were 23 serving MPs receiving pension payments at the level of this statutory Guaranteed Minimum Pension.

  4.9  The total amount of pensions in payment increased over the inter-valuation period from £9.1 million to £10.1 million. This reflects the increased number of pensioners and the annual pension increases awarded under the Pensions (Increase) Acts. The average amount of pension in payment to former MPs and office holders was approximately £15,700 a year on 1 April 2005.

  4.10  General Election. The membership changes arising from the General Election have been taken into account in determining the results of the valuation. 136 MPs left the House at the Election and either commenced to draw a pension from the scheme or became deferred members, with entitlement to receive a pension from some future date. The Election-related changes in the number of members in the main membership categories are summarised in the table below.

*Some of the members leaving with a deferred pension entitlement may in practice have opted to start drawing a pension from the scheme immediately at a reduced level.

  4.11  Accounts. Taken from the published accounts, the income and expenditure of the scheme in the three-year period from 1 April 2002 to 31 March 2005 is summarised in Appendix C. On the basis of the market value of the investments, the scheme's assets increased over the period by £16.0 million, from £267.2 million to £283.2 million, including members' Additional Voluntary Contributions. The table below shows a breakdown of the increase:

  4.12  Following the increase in the Exchequer contribution rate in April 2003, the expenditure on benefits was less than the contribution income over the three-year inter-valuation period. This means that the expenditure remained well below the total of investment income and contributions, so that it was not necessary to sell assets to pay benefits.

  4.13  Investments. Appendix D contains a summary of the scheme's investments at 31 March 2005 and this shows a majority of the investments (about 70% by market value) in equity shares. A substantial holding of equity assets may be appropriate for a pension fund where benefits are linked to final earnings, and where there is an expectation that it will not be necessary to sell assets in the foreseeable future in order to meet expenditure. Following the last actuarial valuation the Trustees reviewed the scheme's investment strategy and decided upon a gradual switch towards an investment holding with a lower proportion of equities than had previously been the case. That switch had been partially effected by the valuation date.

  4.14  The investment return achieved on the scheme's assets on a market value basis over the three years since the last valuation was an average of 1.9% a year. However, there was considerable variation within the three-year period, with the percentage return achieved in each year since the last valuation being as follows:

1 April 2002 to 31 March 2003	-23.5%
1 April 2003 to 31 March 2004	+24.3%
1 April 2004 to 31 March 2005	+11.3%

  4.15  The value to be placed on the investments of the scheme for the purpose of the present valuation is discussed in paragraphs 6.9 to 6.12 below.