Gordon Brown wants to rein in taxpayers spending on MPs' pensions

Prime Minister Gordon Brown has ordered a review of MPs' pensions in a bid to halt the growing cost to the taxpayer.

He has asked the chairman of the Senior Salaries Review Body to consider the "full range of options" for reducing the £12m annual burden.

Increasing the retirement age or ending the current final-salary scheme are possible options.

Both the Conservatives and Liberal Democrats have insisted the final salary scheme must end.

A review proposed in January 2008 was put off by MPs, who voted to delay the inquiry until the cost of pensions hit 20% of their total payroll, which is around £130m.

The review was triggered when the Government Actuary's Department warned the prime minister that the 20% threshold was likely to be breached.

The cost to the Treasury of MPs' pensions has risen from £9.8m in 2003 to £12m last year. Over that period, MPs themselves were asked to contribute only an extra £700,000.

'Blank cheque'

BBC political correspondent Reeta Chakrabarti said a government source had said Mr Brown strongly felt the need to get a grip on the issue.

"Gordon Brown clearly wants to send a signal that he's being tough at a time when voters are facing financial difficulties of their own," she said.

Lib Dem work and pensions spokesman Steve Webb said: "When private sector companies are closing their final salary schemes because they are unaffordable, taxpayers simply cannot be asked to go on writing a blank cheque to maintain MPs' pensions in their present form."

A Conservative Party spokesman added: "On the specific matter of final salary schemes what is needed is a decision - not another review."