MPs' Pension Scheme 2026: How It Works Under IPSA
Members of Parliament build up pension under the Parliamentary Contributory Pension Fund, administered independently of MPs' own votes since IPSA took over pay and pensions in 2010. Here's how it works.
What the Parliamentary Contributory Pension Fund is
MPs are not employees in the ordinary sense, but they build up an occupational-style pension through the Parliamentary Contributory Pension Fund (PCPF), a defined benefit scheme run on a career average revalued earnings (CARE) basis for current service, similar in structure to many other public service pension schemes reformed around 2015.
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Open Pension calculatorWhy IPSA sets the terms, not MPs
Before 2010, MPs voted on their own pay, expenses, and pension arrangements — an obvious conflict of interest that contributed to public anger during the 2009 expenses scandal. The Independent Parliamentary Standards Authority (IPSA) was established specifically to take these decisions out of MPs' own hands, setting parliamentary salaries, expenses, and pension contribution rates independently.
How the scheme works
| Feature | Detail |
|---|---|
| Scheme type | Career average revalued earnings (CARE) defined benefit |
| Contributions | Employee contribution from parliamentary salary, employer contribution funded separately |
| Accrual | A proportion of pensionable parliamentary salary added to the pension account each year in service |
| Revaluation | Accrued pension revalued annually while an active or deferred member |
| Normal Pension Age | Generally linked to State Pension age under the current scheme design |
What happens when an MP loses their seat
Parliamentary careers can end abruptly at a general election, regardless of an MP's own wishes. When this happens:
- The MP becomes a deferred member of the PCPF.
- Pension already built up is preserved and revalued (broadly protecting it against inflation) until it's eventually drawn, usually from Normal Pension Age.
- No further pension accrues unless and until the person is re-elected and rejoins the scheme as an active member.
This mirrors what happens to anyone leaving an employer's defined benefit scheme before retirement — the key difference for MPs is simply that the "employer" relationship can end suddenly and involuntarily at an election, not through resignation or dismissal in the ordinary sense.
Lump sum and tax treatment
MPs can typically exchange (commute) part of their annual pension for a tax-free lump sum, within the same HMRC Lump Sum Allowance limit (£268,275 for 2026/27) that applies to other registered pension schemes. Pension income in payment is taxed as ordinary pension income through PAYE, exactly like any other occupational pension.
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Open State Pension Forecast calculatorAnnual Allowance and high-profile roles
MPs who also hold ministerial or other additional paid parliamentary roles may have combined pensionable earnings that push pension growth in a given year closer to, or above, the standard Annual Allowance (£60,000 for 2026/27) — and the tapered Annual Allowance can apply to MPs with high adjusted income from all sources, not just their parliamentary salary, in the same way as it would for any other high earner.
MPs' pension and State Pension
Membership of the PCPF does not replace the State Pension — MPs (like any other worker) build up entitlement to the new State Pension through their National Insurance record in parallel with their parliamentary pension, which is paid entirely separately.
Why the scheme attracts public scrutiny
MPs' pensions are a recurring topic of public and media interest, partly because:
- MPs set policy affecting other public sector pension schemes (state pension age, public sector pension reform) while also being members of a public service scheme themselves.
- The independence of IPSA is specifically designed to prevent any perception (or reality) of MPs benefiting from decisions they personally control.
- Historical final-salary-style legacy arrangements (before the 2015-era reforms) were, like other public schemes, generally more generous than the current CARE structure, and transitional arrangements have followed the same broad pattern (including McCloud remedy litigation) as other public service schemes.
Use the pension calculator to model general career average pension growth, and consult official parliamentary pension scheme guidance for MP-specific figures.
Frequently asked questions
What pension scheme do MPs belong to?
Members of Parliament build up pension in the Parliamentary Contributory Pension Fund (PCPF), a career average revalued earnings (CARE) defined benefit scheme, with terms set independently by the Independent Parliamentary Standards Authority (IPSA) rather than by MPs themselves voting on their own pay and pensions.
Why does IPSA set MPs' pensions instead of MPs voting on it?
IPSA was created following the 2009 expenses scandal specifically to remove MPs' ability to set their own pay, expenses and pension terms, addressing the clear conflict of interest in politicians voting on their own remuneration.
What happens to an MP's pension if they lose their seat at an election?
An MP who loses their seat becomes a deferred member of the scheme, keeping the pension they've built up (revalued until it's drawn), but stops actively accruing further benefits from the point they leave Parliament, similar to leaving any other employer's pension scheme early.
Do MPs pay into their pension like other employees?
Yes. MPs pay employee contributions from their parliamentary salary at a rate set by IPSA, with a separate employer contribution funded from parliamentary expenditure, broadly mirroring the contributory structure of other public service pension schemes.
At what age can MPs draw their pension?
The Normal Pension Age under the current scheme design is generally linked to State Pension age, in line with the wider trend across public service pension schemes since around 2015, though transitional protections may apply to some longer-serving members.
Is MPs' pension income taxed the same as other pensions?
Yes. Once in payment, MPs' pension income is fully taxable as pension income through PAYE, and is subject to the same Annual Allowance, tapered Annual Allowance, and Lump Sum Allowance rules as any other registered pension scheme.
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