Prime Minister Stephen Harper stands to lose well over $1-million in retirement benefits extended to prime ministers under pension reforms passed unanimously by the House of Commons.
Having approved policies earlier this year that will make millions of Canadians wait until they are 67 before collecting Old Age Security, Mr. Harper personally approved changes in his government’s second budget bill that scale back and delay benefits to one person: the Prime Minister.
All parties in the House of Commons agreed unanimously on Friday to split the government’s second omnibus budget bill to remove the sections dealing with MP pensions. Those measures were placed into a new bill, passed and sent to the Senate without debate or a standing vote.
Inside these reforms is a change to a special allowance – in addition to their MP pension – for former prime ministers. Under existing rules, a former prime minister receives an allowance of two-thirds of their salary starting at age 65 – or when they retire as an MP, whichever is later.
Under a change in the law that is retroactive to Feb. 6, 2006 – the day Mr. Harper was sworn in as Canada’s 22nd Prime Minister – the formula will be much less generous. Instead of 66 per cent of past salary, Mr. Harper and his successors who have served at least four years will receive 3 per cent of salary multiplied by the number of years of service. The earliest age for receiving benefits will also be pushed back to 67.
That is the same age that will apply to Old Age Security changes that affect Canadians who were 53 or younger as of March 31, 2012. The age of eligibility for OAS will be gradually increased to 67 from 65 between 2023 and 2029. Payments for OAS are currently $6,122.52 a year, so a two-year delay will cost a couple $24,490.08, plus inflation.
Mr. Harper will hardly be hurting in retirement, given that changes to MP pensions will be phased in, rather than imposed retroactively for current MPs. But sources say he made it clear behind the scenes that the PM’s allowance should also be reduced as part of the wide-ranging spending cuts.
Under the current system, Mr. Harper would have received a supplement of $104,102 a year when he turns 65 in 2024, unless he was still an MP.
Pushing back the age to 67 costs him $208,205. Then the new formula will cost him more, depending on how many years he is Prime Minister.
For instance, if Mr. Harper retires as an MP after 10 years as Prime Minister in February, 2016, he would receive $47,319 a year in retirement, instead of $104,102, which is $56,783 less per year than under the old rules. If Mr. Harper lives to age 82, he would receive $1.6-million less under these new rules. If he lives to 92, the hit would be $2.2-million.
That is in addition to the cut he will take with all other MPs under changes to their pension plan. The Canadian Taxpayers’ Federation calculates that if Mr. Harper retires in 2016 and lives to 80, he would receive $180,476 a year in retirement benefits instead of $223,517 under the old rules, a cumulative loss of $2.1-million.
Agreeing to split the latest omnibus bill was a rare about-face for the Conservatives, who have long rejected calls to divide such bills. The Liberals initially proposed a motion that would have immediately passed all of the budget bill’s pension provisions, including those that affect public servants.
Through negotiations, all parties agreed to divide and fast-track only the sections dealing with pensions for MPs and Senators.
Liberal finance critic Scott Brison said it gets the opposition out of a political bind.
“The government initially, I think, wanted to put us in a position where we would be voting against the Budget Implementation Act for a variety of reasons and then to be able to accuse us of somehow being opposed to the cuts to MPs’ pensions,” he said. “We preempted that.”
NDP House leader Nathan Cullen said the government’s move opens the door to calls for further divisions of the bill, which the opposition says is too large and wide-ranging to be studied properly by a single committee.
Comments from Government House Leader Peter Van Loan suggest the government is open to splitting provisions only if it means they will be passed with less, not more, debate.