The Canadian Taxpayers Federation (CTF) is welcoming reforms to the MP and government employee pension plans, calling it the “most significant reform to MP pensions we’ve seen in our 22-year history.”
The changes recently introduced into Parliament by the Conservative government will see MP pension contributions currently slightly more than $11,000 a year climb to almost $39,000 by 2017.
Kamloops-Thompson-Cariboo MP Cathy McLeod says she has been committed to supporting changes for some time now.
“Since I was elected in 2008, I’ve heard loud and clear from people throughout this riding that they believe the MP pension plans were too rich.”
The CTF also applauded the decision to move both MPs and new government employees to a retirement age of 65 for a full pension, beginning in 2015.
A decade of additional pension payments for MPs will make a “vast improvement” to current pension inequities for Canadians, the CTF states.
McLeod adds she is “very proud” of Prime Minister Stephen Harper’s leadership on the issue, and of his listening to taxpayers.
“The changes to move toward both paying our fair share and increasing the retirement age from 55 to 65, as the taxpayers federation has said, is the biggest move that any government has made in many years.”
She notes Harper also leading by example by making significant changes to his own special allowance (PM pension plan).
The CTF estimates that once all the reforms are in place, a new MP elected after 2017 would be eligible for a $101,000 annual pension after three terms of office. That same MP would have contributed nearly $589,000 towards that pension.
Treasury Board president Tony Clement said it will save taxpayers $2.6 billion over five years.
However, these changes to the public service pension plan are “one step” towards solving the imbalance with those in the private sector – most of whom have no pension at all – while paying for “very rich” pensions for government workers, CTF adds.
The federation also expressed its disappointment that government didn’t require the MP pension fund to be invested, so those returns could top up the fund, rather than resulting in “phony” interest payments and adjustments in a further hit to taxpayers.
However, McLeod’s responds by reiterating that such a “huge, significant and important” change as this will leave MPs “paying their fair share.”
Some taxpayers continue to complain they have contributed big money for decades, so they could retire with a full pension still much smaller than an MPs, but McLeod says that gap is narrowing.
“I was involved in health care before, and it’s becoming not dissimilar to those sorts of [pension] plans.”
She explains people may be misunderstanding the MP pension plans provide less money for fewer years’ contributions, increasing as time and the amount of actual contributions accumulate.
“An MP that only works six years has only invested six years into it; it’s the same as for nurses. Years of contributory service are years of service, whether it be MPs or it be nurses.”
In another twist, MPs voted to remove pension reform from an omnibus bill with a multitude of other new legislation on Oct. 19.
The prodigious bill could have taken many weeks to pass, but would have seen pension reform opponents, in or out of the Conservative caucus, under pressure to vote in favour of it in order to support other initiatives in the bill.
Instead, members of the House of Commons will now vote separately on the pension changes.