Montréal, le 6 juin 1998
Numéro 13
 
(page 6) 
 
 
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     « Extremism in the defence of liberty is no vice... Moderation in the pursuit of justice is no virtue. »   
  
Barry Goldwater
 
  
  
 
MUSINGS BY MADDOCKS
 
I'M ALRIGHT JACK...
 
 by Ralph Maddocks
  
  
          That old British expression came to mind recently when I compared what has been happening to the government's pension schemes for the voters and the scheme for those we elect. 
 
          At the end of the last session of parliament in 1997 there were 54 eligible Quebec members of Parliament, 40 Bloc Québécois members and 14 Liberals, who could expect to receive some $36 millions in pensions, based upon estimated payouts to age 75, an average of $667,000 each. Not bad compensation for those trying to break up a country — not bad compensation either for those who are supposed to be trying to stop them. 
 
          In his election campaign of 1984, under pressure from certain right-wing groups, the unregretted Brian Mulroney promised to reform the « gold plated » Pension Plan for Members of Parliament. However, when later he attempted to keep his promise he was confronted by a massive revolt by his caucus. He probably knew this in advance anyway, which is why it was easy for him to make the promise in the first place. 
          Following that change of government, some 130 defeated and retiring MPs started to collect their pensions which, regardless of their ages, averaged about $40,000 each, a total of some $5.5 million a year excluding inflation protection. The interesting thing about these pensions is that the contributions made by these MPs and the « matching amounts » credited to them will run out sometime before the year 2000. In other words, their pensions are underfunded. If this were a private company, the trustees of the fund would probably be making licence plates or sewing mailbags for a few years. A private pension plan must, by law, make certain that the money to pay the pensions is there for the expected lifetimes of the annuitants.  
 
          The Liberal government under Jean Chrétien (the man who promised to abolish the GST) also promised to reform MP's pensions. He waited for over a year before doing anything, during which time some 52 sitting MPs became qualified for underfunded lifetime pensions. The total cost of this delay amounts to almost $1 million annually, payable immediately upon their leaving the House of Commons, regardless of their ages. In December 1994, Mr Chrétien, true to his promise and probably knowing what would happen like his predeccessor, attempted to reform the pension plan and was met by a similar caucus revolt. Ultimately, in the spring of 1995, a very much diluted pension reform bill was introduced which passed in July of the same year. Not all MPs are unconscious of the profligate nature of their pension plan and fifty-one Reform, six Liberal and four Bloc members chose to save the taxpayers the additional expense of about $34 million. They opted out of the new pension scheme entirely; but more than 230 MPs, untroubled by such concerns for their fellow taxpayers, remained in the plan. 
 
...keep your hands of my stack 
 
          The « Old » plan essentially gave an MP a pension credit of 5% per year of service, so that an MP with six years service would get 30% of the average of his best six year's pay. After seven years it would be 35% etc. up to a maximum of 75% after 15 years service. There was no minimum age for collecting a pension and no limit regarding additional benefits payable with respect to salaried appointments (Cabinet minister, Parliamentary secretary, etc.). The « New » plan provides for credits of 4% per year of service with a maximum pension of 75% after almost 19 years of service instead of the former 15 years. Again there is no limit regarding salaried appointments but they can collect only after age 55. Any MP who qualified under the old plan may still collect his pension regardless of age.  
 
          Those of us in the real world earned our pension credits at the rate of 2% a year with maximum pensions of 70% being paid after 35 years service, eligibility at age 65 or at best 55 (on a reduced basis). 
 
          Even after these minor reforms, MPs' pension entitlements grow twice as fast as they do in private pension plans. This would be illegal under the Income Tax Act, except for the fact that the government set up a special « Compensation Arrangement Account » for MPs. These CAA's accumulate contributions and pay out benefits in excess of those allowed by the government's own pension rules. Who better to avoid the government's own legal restrictions than our legislators? 
 
          Of course, our MPs pensions still have unlimited inflation indexing, unknown in the private sector, but their opportunity to « double dip », i.e. to hold another federal job while receiving a pension, has been restricted. The long suffering taxpayer will now have to supply $4 of his taxes for every $1 contributed by the MP; admittedly marginally better than the $6 we used to pay out under the old scheme. So perhaps it is progress of a kind. 
 
          Last week saw the resurrection of the pension question when a committee, meeting in secret and hoping to present the House of Commons with a fait accompli, suddenly found its intended scheme made public. In brief, the idea was to increase MP's pay by 2% a year for 4 years and to allow those Reform members, who now regret their stand against the « gold plated » MP's pensions, to return to the arms of our beneficent government. 
 
          I have a suggestion. Why not give our MPs a 10% per year increase for each of the next five years; and tell them all to stay home! 
 
 
 
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