29th November 2005

Rt Hon Gordon Brown MP

Chancellor of the Exchequer

HM Treasury

Horse Guards Road

London SW1A 2HQ

Dear Chancellor,

Affordability of Pensions – £2.13 million as PM for a day

You insist before Adair Turner publishes his long-awaited Report tomorrow that our country’s pensions must be affordable. Will you lead by example? Many millions in Britain face working longer, trapped in a vicious spiral of means testing because your Pension Credits undermine incentives to save. But you have to serve only another 4 years in Parliament to complete the 26 years and 8 months needed to be entitled to a full index-linked pension of £36,934 a year. It would cost you £1million to buy a comparable pension to the one you have already accrued as an M.P. from a private sector provider such as Prudential. You also have rights to an extra pension for your service as Chancellor since 1997.

If you took over as Prime Minister tomorrow, you would immediately be entitled to an extra pension of £62,418, fully index-linked for life, even if you only serve a day in the post. That would cost you £2.13 million from the Pru. How can it be right to take that on top of the generous pension you have already earned?

Pensions affordability starts at the top. Mr Blair may have made financial commitments on the basis of his retirement package, but will you give a lead by announcing now that you would not take the extra instant Prime Ministerial pension?

Matthew Oakeshott

Liberal Democrat Pensions Spokesman

House of Lords

Quotation for G Brown – Born 20 Feb 1951 – Elected to Parliament 1983

(Fully index-linked annuity for life with surviving spouse’s annuity at 5/8)

Age Next Birthday : 55 PURCHASE PRICE
M.P’s pension: = 22.4 / 26.7 years x £36,934 p.a. - £1 million
P.M.’s Pension if appointed now = £62,418 p.a. £2.13 million
TOTAL £3.13 million