By Joan Bryden, The Canadian Press March 30, 2012 11:55 am
OTTAWA — So much for sharing the pain.
Retirement just got harder for ordinary Canadians and for public servants, but the gold-plated pension plan enjoyed by members of Parliament has emerged virtually unscathed — at least for now — from Thursday’s federal budget.
The budget promises only to begin moving "over time" toward making parliamentarians pay 50 per cent of their pension contributions and vaguely refers to further "adjustments" which won’t take effect until after the next election in 2015.
"So far, the government’s been pretty hard on ordinary Canadians and there’s no evidence that they’re willing to lead by example at all," said Gregory Thomas, federal director of the Canadian Taxpayers Federation.
For most Canadians under the age of 54, Thomas noted: "You’ve just had two years added on to your working life, you’ve just had your old age security benefits postponed by two years," yet "they don’t say a word about the MP pension plan."
"We’ve been led to believe that this government is capable of providing leadership and making tough decisions but, if it is, there’s no proof of that in this budget at all."
The federation has long crusaded against the parliamentary pension plan, under which MPs who’ve served a minimum of six years are entitled to start collecting what critics contend is one of the most generous pensions on the planet at age 55.
MPs enjoy pension benefits worth up to 75 per cent of their salary — and indexed to inflation — while ordinary Canadians are restricted by law to tax-sheltered pensions worth less than one-fifth of their annual pre-retirement income.
The federation estimates that Prime Minister Stephen Harper will be eligible to collect an annual pension of at least $223,500 by 2015. Pierre-Luc Dusseault, a rookie New Democrat MP elected last May at the tender age of 19, can retire from politics at 27 and still be eligible to collect an annual pension of $40,000 once he turns 55.
Unlike the pension plans most Canadians rely upon, the parliamentary pension fund is immune to market meltdowns. It is not invested in the markets and its interest rate is set by regulation and paid for by taxpayers.
And whereas most private sector plans require employees and employers to each pay 50 per cent of contributions to their pension fund, the government officially reports that MPs contribute just $1 into their plan for every $5.80 contributed by taxpayers. The federation maintains the real ratio is more like $1 for every $23.30 from taxpayers, once disguised interest and accounting sleight of hand is taken into account.
Public service pensions are more generous than what most Canadians can count on — worth about one-third of their annual pre-retirement income — but they’re still not as cushy as MP pensions. It appears civil servants are going to have to pay more and wait longer to collect them.
Federal public servants currently pay 36 per cent of their contributions, with the government (that is, taxpayers) picking up 64 per cent. The budget says the Public Service Pension Plan will be adjusted "over time" to a 50-50 contribution ratio, as will pension plans for the Canadian Forces, RCMP and parliamentarians.
Finance Minister Jim Flaherty said the change in contribution ratio will be phased in, starting next year. A spokesman for the minister later said the 50-50 ratio will be fully implemented in 2016.
"It’ll take some time to get there but that’s the direction," Flaherty said, adding that there has to be more consultations because the changes will impact collective agreements with the public service.
As well, the budget says for those who join the federal civil service starting in 2013, the normal age of retirement will be boosted to 65 from 60.
An official said the savings from the changes to public service pensions will be in the ballpark of $500 million.
There is no such estimate for the savings anticipated from the "adjustments" to the MP pension plan. Officials said that’s because the unspecified future changes will require consultation and legislation to implement.
Thomas said the ambiguity "makes you question the government’s resolve and its ability to lead through a difficult economic period."
"Are they putting the country first or are they still trying to figure out how to end their days on Parliament Hill with the most public dollars possible?"
While they’re still guaranteed a soft landing when they retire, MPs will have to get by for now with a bit less money for running their Parliament Hill offices. One day before the budget, it was announced that spending for the House of Commons will decrease by $30.3 million or 6.9 per cent, including $13.5 million less for MPs and House officers, $13 million less for House administration and $3.8 million less for committees, parliamentary associations and parliamentary exchanges.
The reductions are to be phased in gradually and fully implemented by 2014-15.
Joan Bryden reports for The Canadian Press.