I understand that this article describes the pensions for MPs. Nevertheless, the principle applies to elected representatives of all types.
Tuesday, April 13, 2010
75 MPs approach pension jackpot
Don Martin, National Post
Chris Wattie, Reuters Files
In 75 days, another 75 MPs will join that most exclusive of retirement clubs by qualifying for the safest pension on the planet.
The surviving members of the MP class of 2004 will have reached six years of elected service on June 24 and thus qualify for a minimum $27,000 parliamentary pension at age 55 that will, in some cases, hit six figures by the time they are unelected.
The pension for those lucky MPs and Cabinet ministers like Jim Prentice, Rona Ambrose, Diane Finley and late minister of state Helena Guergis is, according to Canadian Taxpayers Federation director Kevin Gaudet, “the most lucrative in the country.”
Protected from stock market free-falls and indexed to the rate of inflation, the MP pension fund is the closest thing to a guaranteed senior citizen payoff anywhere.
Actually pension “fund” is a misnomer. The MP contributions disappear into a bottomless pot filled with your tax revenue. That means there’s no practical limit to payouts from the no-risk plan.
So unbeatably generous is the scheme that conspiracy theorists suggest enthusiasm for a federal election this spring was dampened by MPs, including 18 Bloc Quebecois, who didn’t want to risk losing their seats a few months before they hit the federal government jackpot.
The government pension “fund” has been on an interesting track lately, growing by 10% during the recession in sharp contrast to the 21% average drop in the value of private plans and 14% hit on the Canada Pension Plan, according to a recent Organization for Economic Co-operation and Development report.
This jarring contrast comes at a time when parliamentary secretary for finance Ted Menzies is roaming the country for a second year in a row consulting on pensions, some grossly underfunded or collapsing amid corporate bankruptcies, while examining the state of retirement readiness for a report to finance ministers in May.
Mr. Menzies confirmed that parliamentary pensions are on the agenda. And it’s a safe bet this outrageous disparity will never be raised in Question Period, either.
Every time the MP pension plan comes up, one face comes to mind: Jason Kenney. The current immigration minister and Calgary MP rocketed to fame by using his status as the Alberta Taxpayers’ Federation pension-fighter to publicly shame then-premier Ralph Klein into killing the provincial MLA pension plan just before the 1993 election.
Now that’s he’s just 41 and at the top of the food chain politically with his fifth term in progress and no end to a promising career in sight, Mr. Kenney is heading for a six-figure pension when he hits 55, payouts enriched by his salary premium as a Cabinet minister.
Despite a government-commissioned report by economist Jack Mintz last December that concluded Canada was not in an imminent pension crisis, public apprehension about retirement is clearly rising.
Alberta’s talking about going it alone with a supplemented Alberta Pension Plan. Ditto for British Columbia.
The federal Liberal “deep thinkers” conference last month featured speakers recommending a supplemental plan to let Canadians contribute more to raising their CPP benefits.
The federal government is musing about boosting mandatory contributions or reforming RRSPs and tax-free savings accounts to induce higher retirement savings.
Any reforms under discussion will be too late for the first Boomers heading for retirement. They’ll have to live high on the hog or dine on dog food, based on their current savings.
But there’s no small irony in having the one group immune from retirement risk — veteran MPs and the public service that orbits them — as the ones responsible for reforming a system causing the rest of us high anxiety about low pension payouts.