CTF Reacts to Last-Minute MP Severance Legislation (Bill C-37) Criticizes Canadian Alliance Duplicity Releases Calculations Showing MPs Will Collect Millions in Pensions


MP pension calculations

This link provides a financial breakdown of each MPs pension. You will need Adobe Acrobat to read this file.

OTTAWA: The Canadian Taxpayers Federation (CTF) has reacted to yesterday evening's tabling of legislation (Bill C-37) that provides extra severance benefits to MPs who currently participate in the gold-plated MP Pension Plan. The proposed legislation also allows MPs, mostly Canadian Alliance members, to opt back into the MP pension plan.

"It seems that this greed is never ending. Not content to be participants in the second most generous pension plan in the country, now the class of 1993 (mostly Liberal MPs) is looking for a severance top-up of $34,000 to boot," said CTF federal director Walter Robinson. "And the fact that this legislation will be rushed through in two days with no opportunity for public input, further serves to reinforce public perceptions that MPs are simply looking out for number one, themselves."

"It's déjà vu all over again," added Robinson, referring to the no-vote, no-debate, pay raise that was passed by MPs in June, 1998, hours before the Commons rose for summer recess. "It's pathetic that MPs continue act in such a cowardly manner. The principles of transparency, simplicity and fairness, which we've articulated for a decade, have been discarded in favour of backroom dealings and political expediency."

"For the Alliance to so willingly go along with this Bill smacks of duplicity," stated Robinson. "Perhaps the Alliance should contemplate another name change, this time to, just another old-style political party. The principles and courage that so many Alliance MPs exhibited five short years ago are disappearing quicker than the tropical rain forest in Brazil."

"It took seven years for this government to re-index the tax system to inflation. And it's been five years with no progress on reducing internal trade barriers. On important public policy matters, things move at a snail's pace in Ottawa. But when it comes to topping up their own severance allowances and pensions, well that's another story. On this front, MPs move quicker than an Olympic sprinter on steroids," emphasized Robinson.

Changes introduced in Bill C-37 will ensure that MPs elected in 1993, who already participate in the gold-plated MP pension plan, will now be eligible to receive a transitional severance allowance of up to 6 months salary (or $34,000) upon defeat. Meanwhile, they can collect their pensions at age 55, a full ten years earlier than the time when most Canadians are eligible to receive CPP. Bill C-37 also allows MPs who opted out of the pension plan in 1995 to opt back into the plan retroactive to the date of their election to Parliament.

The CTF also released comprehensive pension calculations for each sitting Member of Parliament. These calculations assume all MPs will collect their pensions until age 75 with an annual inflation rate of 2.5% per annum.

"To come back now and further top up their compensation just before they jet off for the summer barbeque circuit is unconscionable," concluded Robinson. "Our calculations show that many of

these MPs will reap millions in future pension payments, and now they want even more! Their actions show nothing but contempt and disdain for the people they supposedly represent - Canadian taxpayers."

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MP Pension and Compensation Facts

Excluding salaries, MP Pensions and Benefits cost Canadian taxpayers $21 million per year.

Next to federal judges, the MP pension plan is the second richest public service pension plan in the country.

This is the third instance of "dubious" timing for the issue of MP Compensation.

Blais Compensation review commission was announced on the Friday before the August 1997, long weekend.

MP Pay raises were passed on the last day of sitting with no-debate in June 1998.

MP Severance adjustments introduced with no opportunity for public input, June 2000, during the last week of sitting of the House of Commons.

In 1989/1999, for each dollar MPs contributed to the MP Pension Plan (Retiring Allowances Account and the Retirement Compensation Arrangements Account), Canadian taxpayers contributed $3.72. (Source: Calculations from Volume 1, Chapter 6 - Tables 6.18 and 6.19, Public Accounts of Canada)

The MP Pension plan accrual rate is 4%, twice the legal limit under the Income Tax Act and after 6 years of service, the pension is fully vested and indexed for inflation. MPs can collect their pensions at 55, a full decade earlier than most Canadians can collect CPP. MPs are eligible for 75% maximum benefits after 18 years of service, compared to the private sector average of 35 years for equivalent pension coverage.

The fully taxable equivalent the current MP salary is in excess of $110,000. This places MPs in the top 2% of all income earners in Canada.

Note to Editors: Please read all explanatory notes found at the bottom (end) of each of three MP Pension calculations worksheets attached to this news release.