The current pension plan for MPs and senators is unreal in two different ways: first, in the slangy meaning of “incredible” or “amazing,” for its excessive generosity; second, in the more literal sense that the plan hardly exists except as a set of figures on a ledger, as an unfunded claim on the federal government’s general revenues.
On both grounds, the pension arrangements of members of Parliament need to be thoroughly overhauled. And it is even more important that MPs set a good example to employees in the public sector.
In the budget of March, 2012, the Conservatives undertook to make the employer and employee contributions to the Public Service Pension Plan equal, over time, and to make “comparable changes” to the plans for parliamentarians, the military and the RCMP.
A lucid paper, published in January, by William Robson of the C.D. Howe Institute may well have helped spur the government to action.
The change for MPs will have to be large; they now put in 7 per cent of their pay, while the Crown contributes 44 per cent of their pay: at best, a one-to-six ratio. This was promised for the next Parliament, and is reportedly coming in the omnibus budget bill next week – such bills are in themselves an undesirable practice, but sooner is better than later in this instance. Peculiarly favourable treatment for parliamentarians undermines respect for government, public service and public life as a whole.
Still, there is probably a link between the lavishness of the MPs’ pension arrangements and their fanciful, science-fiction quality. It may be less a matter of greediness than of fecklessness. If there were an actual fund, there would be a fund manager, who would need to worry about earning enough return on investment to cover the promises made to politicians.
With a distinct pot of money, there would be a sense of limits. Now, however, there is blithe confidence that the whole revenue stream of the federal government will keep on flowing.
Not only should there be a fund, but it should not rely on the unrealistic, historical rates of return that are still relied on in public-sector accounting practices in Canada, in spite of the abnormally low interest rates that now prevail.
The March, 2012, budget document spoke of an adjustment to MPs’ pensions. That is too cautious. The public’s trust in their representatives requires a comprehensive redesign.