Last week, Prime Minister Harper flew to
to make statements on our nation’s pension
sustainability, spurring much talk back here in Switzerland about which pensions need reform, and whether there
will be wealth enough to pay our retirement benefits in the future. Canada
Everyone agrees that the Canada Pension Plan (CPP) will remain solvent for the long term. But there are real questions about the future cost of Old Age Security (OAS), and some well-deserved uproar about the rich pensions our Members of Parliament receive.
Today I’ll talk about MP pensions, and in future columns look at OAS and the issue of public service compensation in general.
First, the facts: each of our 308 Members of Parliament has a base annual salary of $157,731, plus expenses, with bonuses for MPs who serve in Cabinet or other special roles. MP salaries are thus in the top 2% or better of Canadians, which gives them several options for financing retirement. Their mostly taxpayer-funded pension plan kicks in after 6 years in office and begins paying out at age 55. By way of example, our Barrie Member Patrick Brown will be eligible for $46,049 per year by 2015, or $64,989 if re-elected again. (These benefit amounts come from the report issued by the Canadian Taxpayers Federation).
This generous plan was founded in 1952, to protect MPs from a loss of income. Otherwise, only the rich could afford to stand for public office. At the time, it made sense, but since then, new options have arrived, including CPP and RRSP programs. Their salary is well above the yearly maximum pensionable earnings for CPP, and above the level of maximum RRSP contributions, so an MP can reap the maximum from each of these plans. Yet the MP pension has not been amended to take today’s situation into account.
We need not go as far as
or Ontario , which both offer no pension for members of their provincial
legislatures. I’m also worried that ending MPs pensions could go hand-in-hand
with windfall buyout payments, as happened under Alberta premier Mike Harris in 1996. Ontario
An MP’s role involves real work of real value, so they deserve a fair pension like any other Canadian. But do they really deserve to, as one of my friends puts it, “win Lotto 308”?
What seems fair to me is for MPs to receive a pension in line with the rest of Canadians. Their contributions should be matched dollar-for-dollar, and their nominal retirement age should be the same as for the rest of us: sixty-five. They should be able to fully participate in CPP and RRSPs. Including those other benefits, this would ensure that MPs received a fair reward without putting an unnecessary burden upon the public purse.
Published in my Root Issues column in the Barrie Examiner.
Erich Jacoby-Hawkins is a director of the Ontario School of Economic Science and Earthsharing Canada.