Stephen Harper put Conservative MPs on notice this week that changes are coming to their generous pension plans.
During a closed-door caucus meeting Wednesday, the Prime Minister told Conservative MPs that he’ll be coming forward with a plan to reduce the cost of the controversial benefit plan.
The government’s March 29 budget is expected to include changes to public-service pension plans – likely by requiring workers to contribute more. It will also include long-term changes to Old Age Security, possibly by raising the age of eligibility to 67 from 65. Sources say the message from the Prime Minister was clear: Selling these changes will require MPs to do their part.
No details were offered as to exactly how big a hit MPs will be asked to take. Currently, MPs qualify for a pension after six years and can start collecting at age 55. The Canadian Taxpayers’ Federation calculates that if Mr. Harper, 52, stays in office until 2015, he will be eligible for a pension of at least $223,500 a year.
C.D. Howe President Bill Robson said MPs will have no choice politically but to accept a less generous pension if the budget is going to affect the retirement plans of public servants and future Old Age Security beneficiaries.
“The MPs’ plan really needs to be part of the overall program or there’s going to be a ton of hurt,” he said.
Conservative ministers are playing down the magnitude of government-wide cuts that will be announced in the budget, but there is heated debate among Conservative MPs over the minute details of how restraint will affect their day-to-day lives.
After Mr. Harper delivered his pension message during Wednesday’s 2½-hour morning session, a special caucus meeting was held on how to cut MPs’ office budgets. These changes will directly impact MPs, affecting how many free trips are available to them, their staff and family as well as how much they can spend on staff. Budgets for hotels and apartment rentals in Ottawa are also part of MP budgets.
Led by Chief Government Whip Gordon O’Connor and attended by Finance Minister Jim Flaherty and Treasury Board President Tony Clement, the focus of the lunchtime discussion was on how to achieve a 5-per-cent cut to the House of Commons’s $441-million budget. Similar discussions are also taking place among senators regarding the Senate’s $94.4-million budget.
Pensions for MPs were not part of Wednesday’s lunch session because the issue is being handled as a government file. However, cuts to the House of Commons and MP budgets will come from Parliament’s all-party Board of Internal Economy. It was the second time Mr. O’Connor has sought input from Tory MPs as to what the all-party board should decide.
The Member’s Office budget limit for 2010 was $284,700, which usually allows MPs to hire at least four staff – two in Ottawa and two in the riding. No MP staff can be paid more than $80,900.
NDP MP Joe Comartin, who is on the Board of Internal Economy, said it is close to reaching decisions on how to trim Commons spending, but said the opposition has been left “completely” out of the loop on pension discussions. He said reforming MP pensions should be put to an independent body.
“It really shouldn’t be dealt with by parliamentarians at all. They’re obviously in a serious conflict of interest,” he said.
On the MP pension front, the Canadian Taxpayers’ Federation and the C.D. Howe Institute have both issued reports recently calling for major changes. Both groups argue the lack of a separate pension fund for MPs creates a large unfunded liability. They recommend that MPs start paying into a separate fund such as a group RRSP or Pooled Registered Pension Plan.
That would be a major change to the existing program. Sources say reforms are likely to be more modest, such as asking MPs to contribute more of their salary toward the plan.
A recent taxpayers’ federation report claims that the taxpayer-to-MP contribution ratio is much higher than the $5.80-to-$1 ratio reported by Ottawa. The group says the ratio is closer to $23.30-to-$1.