If you could put a loonie into a machine and get $23.30 out every time, would you ever stop?
That would probably not happen.
It’s human nature and this may explain why members of Parliament have been moving so slowly to reform their platinum-plated pension plan.
Earlier this year, the Canadian Taxpayers Federation (CTF) released a report showing taxpayers put in $23.30 for every $1 parliamentarians contribute to their pension plans.
Some MPs snarled back, claiming the CTF numbers were wrong. They are not wrong.
Others made it clear they were entitled to their entitlements. A few shared the public’s concern about the gold-plated pension plan.
Still nothing has changed.
The Conservatives have promised action, but the federal budget came and went with no specifics on MP pension reform.
The dirty little secret about MP pensions is they aren’t invested into the market like other pension funds. They simply set an arbitrary rate of interest and taxpayers kick in whatever amount is necessary to make it grow by that much.
MPs settled on a return of 10.4 per cent per year—making it the best-performing pension in Canada.
When the recession hit in 2008, the MP pension fund still grew by its legally mandated 10.4 per cent, while the Canada Pension Plan lost 18.6 per cent, the B.C. Public Service Pension Plan lost 14.2 per cent, the B.C. Teachers Pension Plan lost 13 per cent and the WorkSafe B.C. Pension Plan lost 11.2 per cent.
Add to that an incredibly low eligibility threshold for MPs to collect – age 55, six years of service, fully indexed at age 60 and tied to CPI increases annually – and taxpayers are on the hook for millions and millions of dollars for a pension they could only dream of receiving themselves.
It would take a normal Canadian nearly 30 years to save the nest egg necessary to produce the pension payout a backbench MP receives after six years of service – making the same monthly contribution.
If he retired from politics in 2015, a second-term, Opposition MP Don Davies would start with an annual pension of $33,148. If he collected until age 80, Davies would take home $1.07 million in total pension payouts. That’s basically the bare minimum for serving as an MP, after annually contributing $10,900 of his own money while in office.
On the opposite end of the spectrum is Hedy Fry would start with an annual pension of $134,211.
John Duncan would collect $126,829. Dick Harris would start with $118,236. Libby Davies would have to make due with $94,818.
These amounts are all indexed to inflation and increase every year – thanks to Canadian taxpayers.
This has to change.
The Conservative government has promised details of a new MP pension plan this fall, but taxpayers have been waiting years already.
Politicians continue to be reluctant to step away from the machine multiplying their money.
It’s up to taxpayers to unplug the machine by putting pressure on their local members of Parliament to support MP pension reform.
Sign the CTF petition, write or call your MP and let them know that this pension inequity must come to an end.
Jordan Bateman is the British Columbia director of the Canadian Taxpayers Federation.