Pressure on to reduce MP pensions
The Canadian Taxpayers Federation is keeping the pressure on members of Parliament to curtail their pensions and bring them more into line with the average worker.
Wednesday it launched a national “Fed up?” billboard campaign, telling taxpayers they’re dishing out $24 into the MPs’ pension plans for every dollar contributed by the politicians.
An online and telephone petition also was launched.
“With the government planning on tinkering with the MP pension plan this fall, taxpayers must take action now to ensure those reforms are significant and not just putting lipstick on this pig,” says the federation.
The process, though, of hiking MPs contributions already could be underway, says Pitt Meadows-Maple Ridge-Mission MP Randy Kamp.
Discussions have already begun on a new pension plan, and MPs are about to or may already have begun increasing their contributions to get to the point where politicians contributions are equal to that of taxpayers. That may now be underway or may start in January, Kamp said Thursday.
“We’re not going to get there all in one jump, but that’s what was mentioned in the last budget document – that we’re going to begin that process.”
Then more major changes will take place to MP pensions after the 2015 federal election, looking at eligibility requirements, although Kamp expected it would remain a defined benefit pension plan, based on contribution and years of service.
Instead, the taxpayers federation wants MPs to be on a “defined contribution” RRSP-type plan, with the company matching workers’ contributions.
According to the taxpayers federation, if Kamp retires in 2015, after serving 11 years, he’ll earn a yearly pension of $55,290 – or $1.19 million over a lifetime.
If he works until 2019, he’ll get $76,132 a year.
Kamp said those numbers sound about right.
He agrees changes have to be made. “It has to be fair, both to those who are part of the plan and fair to the taxpayers, as well. We’re aware of that and that’s why we’re making some changes.”
But he doesn’t get much feedback from voters on the topic. As an MP, Kamp makes about $157,000 a year and gets another $15,000 for serving as parliamentary secretary to the fisheries minister, for a total salary of $172,000. That’s been frozen for the past three years.
The freeze of MP salaries was part of the first budget under the Economic Action Plan, Kamp pointed out.
According to the taxpayers federation, unlike normal pension plans, “the MP pension fund is not actually invested into the market. By cabinet order, the fund is simply credited with 10-per-cent annual interest, courtesy of taxpayers.”
The taxpayers federation says the plan is not legal under the Income Tax Act, which says that no registered pension plan can exceed an accrual rate of two per cent of salary for each year worked. (It says MPs have set up two funds to get around the law).
According to the federation, in 2010-2011, all sitting MPs and senators contributed a combined $4.5 million towards their pension fund. Between official contributions and ‘interest’ payments, taxpayers put in $110.7 million.
Kamp said Prime Minister Stephen Harper “definitely wants to go to the one-to-one contribution plan.”
“That’s not the plan we currently have, but that’s the direction he wants to go.”