Faced with growing public outrage over their platinum-plated pension plan, some Members of Parliament are talking up the idea of raising their own pay to cover the costs of MP pension reforms that would require they put more money into their own retirement savings.
Or in other words, it’s kind of like asking your 34-year-old son who is still living at home to start paying rent, but then giving him an allowance to cover it.
To their credit Opposition Leader Thomas Mulcair and Deputy Liberal Leader Ralph Goodale went on the record against an immediate pay hike as soon as government MPs floated the trial balloon.
And well they should. This kind of blatant shell game is insulting to taxpayers and would undermine the credibility MPs would gain by reforming their outrageous pension plan. Credibility that could and should be used to rein in federal spending.
It was a similar tact taken by the government when they froze MP and cabinet wages in the first place. When announcing the freeze Finance Minister Jim Flaherty said: “Canadian families and businesses have accepted the need for restraint. Fairness requires that government too should have to keep costs under control.”
Despite the federal government still running massive deficits, the “need for restraint” for some MPs appears to be taking a back seat to the prospect of smaller paycheques.
MPs are not exactly suffering. The base pay for a backbencher is $157,731.
You would think someone making that kind of scratch would be able to put aside a few dollars for retirement. But that’s not an issue for Canada’s parliamentarians. In exchange for putting aside seven per cent of their paycheque - $11,041 a year, MPs receive a guaranteed income for life, starting at age 55. After only six years in office, the lifetime payouts start at over $28,000 per year, rising with inflation. When a retired MP passes, their surviving spouse receives 60 per cent of their pension, also for life, indexed to inflation.
If James Moore, age 36, Canada’s Minister of Heritage, should leave politics before the next election, he is guaranteed $2.8 million pension benefits to age 80, with an annual pension of $89,000 that starts at age 55. If he serves one more four-year term under the current pension scheme, his annual retirement income jumps to $116,000.
Of course, chipping in $11,000 annually isn’t going to foot a multi-million dollar pension bill. In order to fund their massive pension cheques, MPs have written special rules for themselves: they have guaranteed their pension fund an annual return of 10.4 per cent, no matter what happens to the economy, the financial markets, or everyone else’s retirement savings.
It’s time for Canadians to stand up and demand that politicians lead by example. The current pension plan is obscene and a minor tinker won’t suffice. Moreover, with 1.3 million Canadians out of work, after four years of budget deficits, MPs don’t need a raise, they need a reality check.
Please contact Gregory Thomas, Federal and Ontario Director
