A closer look at MP pensions

Before I begin this week’s report I would like to thank the many citizens who respond each week and in particular for the overwhelming response I received from last week’s report on changes to the MP pension plan. One question that a number of citizens raised is what does the MP pension plan moving to a 50/50 cost sharing relationship mean in actual dollars. The answer to this question can vary on account of a number of variables that, like most pensions, include the overall length of time served, the amount of income an MP earns averaged over a five year period, having served for a minimum of six years to be eligible for a pension and finally an MP lifespan once being eligible to collect a pension.

In order to provide more context on this question I will provide an example: under the current pension plan, a MP who retires with nine years of service will be entitled to receive an annual pension of $46,036 per year once they reach retirement age. In order to qualify for that pension, the MP would have contributed roughly $11,665 dollars per year over the nine years for a total paid of just under $105,000. Taxpayers on the other hand would have contributed roughly $68,641 each year over the nine years for a total paid in excess of over $617,000. Easy to understand why these pensions have been referred to as “gold plated” since they were introduced in the 1950s by the Liberal Government of the day.

How does this compare to the revised pension plan with 50/50 cost sharing? As many have asked about my own MP pension I can state that I do not qualify for an MP pension, however for sake of example if an MP served for nine years under the revised MP pension plan, upon retiring they could expect an annual pension of roughly $39,398. Under the revised system instead of paying $11,665 per year the revised amount would be roughly $39,000 per year. Over a nine year term this amounts to just over $350,000 split equally with taxpayers as opposed to the over $617,000 paid for by taxpayers under the current MP pension plan. While both pension plans are very generous, it is easy to see how 50/50 cost sharing on MP pension plans and in the federal public service pension plan will save taxpayers $2.6 billion over the next five years.

Moving forward to this week, debate in Parliament continued on Bill C-518, the private members bill that is summarized by the Canadian Taxpayers Federation as a bill to “revoke the taxpayer-funded pension of MPs and Senators convicted of serious crimes against taxpayers”- to confirm I spoke in support of this Bill and will continue to support bill C-518. Another Bill that I have spoken in support of that is in the House this week is Bill C-21, the “Red Tape Reduction Act” that I have heard strong support for from small business owners in Okanagan-Coquihalla. Bill C-44 “The Protection of Canada from Terrorists Act” is also before the House this week. This is a bill I referenced in my October 30th MP report for those looking for further information. Aside from Bill C-518 other private members business in the House includes Bill C-626 “An Act to amend the Statistics Act” and motion M-534 “Child poverty” along with debate on these Bills will also be a number of votes and Parliamentary committee work is also actively underway.

As always if you have a comment, question or concern on any matter before the House of Commons please do not hesitate to contact me at [email protected] or toll free at 1-800-665-8711.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.