MP Pension Reform Needed, say Greens

The Green Party of Canada is in full agreement that reform is needed for Member of Parliament pension plans.  “Examining how best to reform pensions of MPs is completely in line with what I’ve been calling for in terms of greater financial accountability from our elected representatives,” said Green Leader Elizabeth May.  “A review of MP pensions in order to bring them more into line with norms for other Canadians is the fair thing to do.”

Ms. May has agreed to have all of her expenses open for public scrutiny and has also suggested capping or cutting MPs’ current base salary of $157,731.

“Canada should pay its MPs well but reviewing their pensions in the context of today’s circumstances would be prudent,” said Green Finance Critic Ard Van Leeuwen. “The divide between pensions haves and pension have-nots is growing in Canada and it`s not appropriate to have MP`s at the very high end of the spectrum.”

“We should be examining options for MP pension reform.  We would be willing to look at any proposals brought forward,” said Green National Revenue and Ecological Fiscal Reform Critic Erich Jacoby Hawkins.  “Originally, there was a need to balance the economic uncertainty of being an MP and to ensure good candidates.  However, with the salary plus benefits, and since an MP is in a position to make maximum RRSP contributions, there is no longer any justification for an MP to have a special pension plan that is richer than one any other employee with similar income would have.  We should also examine pushing back the eligibility for receiving benefits to age 65, thus reducing the potential for double-dipping.”  Once they sit in Parliament for six years, MPs are eligible to collect full pension benefits at age 55.

The recent focus on MP pensions comes from a report by the C.D. Howe Institute revealing that MP pension funds, rather than being invested, are guaranteed by law to grow 10.4% per year.  This is in contrast to other pension funds that are vulnerable to market downturns.  The end result is that taxpayers end up paying $23.30 to the MP pension plan for every $1 paid in by the MP.  The report also says that the pension plan is underfunded by up to $1 billion. The Canadian Taxpayers Federation has been leading the charge to have these inequities addressed, calling the situation “a national disgrace.”

“The bottom line is that we need to ensure that all Canadians have adequate incomes in retirement.  A pension system must keep the elderly out of poverty, require minimum additional contributions and have low administrative and investment costs.   An MP’s pension should be in line with what someone with a similar salary in the public service receives,” said May.

The Greens have also been calling for enhancement of the Canada Pension Plan (CPP) by phasing in the doubling of the target income replacement rate from 25% to 50% of income received during working years.