Lord chancellor gets ?2m pension deal

Lord Irvine will get a pension package worth £2m from the taxpayer under a special deal offered to the country's three "great offices of state", the Cabinet Office disclosed last night.

The lord chancellor will get an index-linked pension of £90,000 a year for life, a widow's pension, and a tax-free lump sum of £180,145, the equivalent to an annuity fund of £2m.

This compares with a prime ministerial package of an index-linked pension of £85,750 a year for life, a widow's pension and a tax-free lump sum of £171,554 when Tony Blair retires.

The annuity fund of both men will exceed the £1.4m tax-free limit proposed by the chancellor, Gordon Brown, in the pensions green paper. Both will also get additional private pensions.

The third great officer of state, recognised for historic reasons, is Michael Martin, the Speaker. He will get an index-linked pension of £62,490 a year, a widow's pension and a tax-free payment of £124,979.

The Liberal Democrats called on Lord Irivine to forgo his pension, an offer he is certain to refuse. Lib Dem peer Lord Oakeshott said: "The lord chancellor's pension is uniquely generous. Lord Irvine opposes elected members in the House of Lords because they may require 'financial benefits'. He should give up some of his own.

"He should cut his pension package to no more than the £1.4m ceiling for tax relief proposed in his government's pensions green paper."

The job of chancellor is not recognised for pension purposes as one of the great offices of state. Like other cabinet ministers, Mr Brown will have to rely on his contributory parliamentary pension as an MP plus enhanced payments depending on how long he is in office. Unlike the lord chancellor, prime minister or Speaker, Mr Brown cannot claim the pension when he leaves office but must wait until he leaves parliament. But like MPs his pension will be index-linked and is rated as one of the best value final salary pensions in the country.

Lord Irvine will still be worse off than many captains of industry. A survey by Labour Research revealed yesterday that Jean-Pierre Garnier, chief executive of pharmaceuticals group GlaxoSmithKline, will receive £966,000 a year and Lord Browne, chief executive of BP, will get £800,000 a year.