Prime Minister John Key will get a $9500 pay rise this year and all MPs a $3500 increase under changes announced this afternoon.

The Remuneration Authority's released its decision on pay for MPs, recommending a 2.2 per cent increase, back-dated to July.

This meant Mr Key's salary would jump from $419,300 to $428,500, and his deputy Bill English's pay packet would go from $297,400 to $303,900.

Cabinet Ministers would earn $268,500, up from $262,700 and Leader of the Opposition David Cunliffe's pay would be $268,500, up from $262,700

The base salary for back-bench MPs would rise from $144,600 to $147,800.

Mr Key had told the authority that a 1.4 per cent increase was appropriate, in line with the Consumer Price Index.

The authority said that MPs were entitled to an increase in their salary of 2.8 per cent, but it decided on a lower increase "given the continued need to restrain public sector expenditure" after the global financial crisis.

Travel allowances were cut to $6500 a year. Once this decrease was taken into account, the increase to an MPs' pay package was 1.96 per cent.