Reform MP Pensions, Tax Federation Tells Harper, Layton

The Canadian Taxpayers Federation is crying foul over the “gold-plated” severance packages defeated and retiring MPs will receive as a result of the May 2 federal election.

The federation, which has long called for reform of MP pension plans, estimates the MPs will collect nearly $112 million from taxpayers in pension payments over their lifetime.

In an open letter to Prime Minister Stephen Harper and opposition leader Jack Layton, the CTF estimates that for every dollar MPs contribute to their pension fund, Canadian taxpayers contribute $4—something “completely divorced” from the reality faced by the majority of Canadians.

“At a time when most Canadians worry about their retirement income, our elected officials have insulated themselves with a plan so rich that it borders on contempt. These kinds of arrangements are precisely the reason that 40 percent of electors don’t even bother to vote,” the letter states.

Defeated Bloc Quebecois leader Gilles Duceppe will receive a fully indexed annual pension of $141,000; retiring Conservative Chuck Strahl, $119,320; and retiring Liberal MP Keith Martin, $102,308.

“Only a privileged few in Canada can work for six years and then retire at age 55 with a lifetime pension courtesy of the taxpayer,” CTF national research director Derek Fildebrandt said in a release.

The age of eligibility for MPs receiving retirement pensions is currently set at 55, while the eligibility for the Canada Pension Plan is normally 65.

According to Service Canada, for 2010 the pensions are set to pay out 25 percent of the recipient’s earned income, and the maximum monthly earning paid out by the CCP was $934.17.

While the CCP lost $17.2 billion in 2008-09 and other private pension funds tied up in market investment took huge hits, the half-billion pension fund for MPs and senators gained $53.8 million during the same time period.

That pension fund, unlike the others, is not invested in the markets or indexed to inflation, and is insulated against the risks other pension plans are subject to. MPs and senators earn pension benefits worth close to half their income.

The CTF urges reforming MP pensions to a self-funding arrangement whereby taxpayers match, dollar-for-dollar, MP contributions to their plan, and raising the age of eligibility to 65 to match the CPP.

In its letter, the CTF notes that as a Reform Party candidate in 1993, Harper campaigned on the promise of scrapping such lavish pension plans.

“As a leader of a party dedicated to reducing taxes and controlling public spending we expect that you understand the duplicity of such a rich and extravagant pension plan,” the letter says.

It also asks Harper and Layton to “set the tone” of the new Parliament by cooperating on reforming MP pensions.

The CTF says that after releasing its calculations, its offices were overwhelmed with emails and phone calls from upset taxpayers. It has started a petition to pressure party leaders and MPs to reform the plan.

“We can feel real momentum behind us in our long push to reform MP pensions,” said Fildebrandt. “It seems the only ones defending these gold-plated plans are the outgoing MPs who are benefitting.”