Tories ponder cuts to MP pensions after watchdog details lucrative trough

January 19, 2012

Treasury Board President Tony Clement is eyeing lucrative MP pensions as way of finding savings in his review of government spending – a move that could find support in the majority Conservative caucus.

A senior Tory MP, who asked not to be named, told The Globe the caucus will "support some reforms," adding this will be a "caucus decision not an edict from PMO or Finance."

Making the rounds of political talk shows Wednesday, Mr. Clement picked his words carefully about how he will handle the contentious issue. He said he has been "tasked with putting some options forward" on pension reform.

"I think you've got to be fair to the employee [the MP]but you also have to be fair to the taxpayer," he told CTV's Don Martin. "We are very cognizant of that."

He added that no decisions have been made and that already the government is leading by example as MP and cabinet-minister salaries have been frozen this year. MPs earn $157,000 a year; cabinet ministers make $233,247 and the Prime Minister earns $315,000.

This is all part of the strategic and operating review of government spending that Mr. Clement is leading to find $4-billion in annual savings. Government departments have been asked to propose cuts of between 5 and 10 per cent, the results of which are expected to be revealed in the upcoming federal budget.

Rumours are rife in political Ottawa that Mr. Clement and the Conservative government will be ruthless – meting out the pain now, hoping that over the next three years before the next election the economy will have recovered and Canadians will have forgotten or forgiven Stephen Harper's Tories for the cuts.

The issue of "platinum-plated" MP pensions came to the fore Wednesday after the release of a comprehensive 65-page report from the Canadian Taxpayers Federation. The CTF is arguing that "unsustainable public-sector defined-benefit pension plans are a major liability for balance sheets at all levels of government and threaten the long-term health of the Canadian economy."

It details the costs of these generous pensions to taxpayers – for every $1 contributed by an MP, taxpayers contribute $23 – and how much individual MPs will earn once they retire. Given the economic times and worries about retirement savings among Canadians, the MPs' returns are staggering.

The report notes, too, that "qualified MPs currently serving will be eligible to collect an average pension of $54,693 a year in 2015 in addition to a minimum $78,800 in one-time severance payments for those not qualified or old enough to collect."

Breaking down the math, the CTF report says that if MPs serving now leave in 2015, they would cost taxpayers $11.2-million a year in pension payments. This rises to $262-million by the time each of them reaches age 80.

It doesn't stop there – it provides the amounts for individual MPs. Prime Minister Stephen Harper will receive $223,517 a year if he stays until 2015. This is based on Mr. Harper not "buying back in" to the plan for his service as a Reform MP from 1993 to 1997.

Then there's Gilles Duceppe, the former Bloc Québécois leader, who was defeated in the May election. His annual pension is $140, 765. Helena Guergis, the former Conservative who was also defeated in her Ontario riding, is on the low end of the spectrum with a pension of $39,675 a year. She is married to former MP Rahim Jaffer, who was defeated in the 2008 election; when he turns 55, he will receive a pension of $53,540.

And the youngest MP in the Commons, the NDP's Pierre-Luc Dusseault, who was 19 years and 11 months when he was elected in May, could earn a pension of $40,033 if he can hang in until 2019. An MP needs at least six years of service to qualify, meaning Mr. Dusseault could qualify when he's 26 years old and begin collecting that amount at age 55.

The case for not blowing up the entire plan

But hold on, says former Liberal MP Joe Jordan, who argues MP pensions are just "an attractive political target." (Elected in 1997 and defeated in 2004, he will be able to collect about $26,000 a year in pension benefits.)

"The notion that MPs ride off into the sunset to some beach somewhere and laugh at the taxpayers is absolute nonsense," said Mr. Jordan, who counsels defeated MPs for the Former Parliamentarians Association.

Although he notes he is not supporting these current lucrative pensions, he points out that MPs do face certain occupational hazards. It is, after all, a job one can lose at any time "through no fault of your own."

In addition, he said "there are elements of the job displacing you from where you live" and "you are generally taking a chunk of ... your most productive working years out" for public service.

He recognizes the delicious hypocrisy of the government calling on Canadians to suffer through cuts but not face restraint themselves. However, Mr. Jordan said he hopes the discussion around the issue is a rational one.

"Because politically it's a race to the bottom. Who will do the job for the least amount of money? I'm not sure that's where we want to go," he said.

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