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Stephen Harper speaks during Question Period in the House of Commons after MPs returned from their summer break on Monday, Sept. 17, 2012. (CHRIS WATTIE/REUTERS)
Stephen Harper speaks during Question Period in the House of Commons after MPs returned from their summer break on Monday, Sept. 17, 2012. (CHRIS WATTIE/REUTERS)

FEDERAL PARLIAMENT

Tory MPs struggle with pension reform Add to ...

Conservative MPs are locked in debate over how to water down the lucrative pensions enjoyed by federal politicians – changes that will force Members of Parliament to shoulder far more of the burden for their nest eggs.

A back-to-work meeting of the Harper government caucus in Ottawa Monday that lasted two hours was dominated by discussion over how ambitious the Tories should be in scaling back a range of perks in the relatively generous retirement payout plan.

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The Conservatives promised in the 2012 budget to shift the cost-sharing burden for pensions so that MPs assume half the annual contribution burden by 2016. But there are several possible measures on the table, including slowing the rate at which benefits are enriched and delaying when politicians can start collecting their pensions.

MPs’ pension entitlements accrue at the extremely generous rate of 3 per cent each year, and they can start collecting retirement stipends at the relatively young age of 55.

The Harper government has pledged to scale back MP pensions in the years ahead to demonstrate they’re personally committed to belt-tightening while asking sacrifices from Canadians in an era of restraint. The Tories, for instance, aim to save money through delaying by two years the point at which Canadians receive old age security benefits.

One person familiar with the internal debate on pensions joked the only thing all Tory MPs currently agree upon is the political rationale for the reforms.

Sources say the end result will nevertheless likely be some combination of bigger annual contribution requirements for MPs, a slower rate of accrual for pension entitlements or a later date at which politicians may start collecting their payouts.

The fact the topic consumed so much of the 163-member Tory caucus’s first get-together in months is a sign of how close to home these changes would hit.

Before they proceed, the Tories must first ensure any plan passes muster with their huge 163-member caucus, which itself has divided interests.

Veteran MPs who have spent years in Ottawa and are close to retiring may want to keep their entitlements accruing at a rate of 3 per cent annually, while dozens of rookie MPs haven’t even qualified to earn one yet. Some caucus members hold seats they can easily retain in the next election, while others will be at serious risk of losing their job.

While Tory MPs deliberated inside Centre Block, a small plane chartered by the fiscally conservative Canadian Taxpayers Federation flew around Ottawa carrying a banner that read: “Back to Work MPs: Fix Your Pensions!”

Gregory Thomas, federal director of the taxpayers group, asks why more sweeping reform isn’t considered: Why couldn’t the federal government merely match contributions by MPs to their personal registered retirement savings plans and tax-free savings accounts?

“I don’t think it’s reasonable that taxpayers owe politicians an income for life once they get elected to Parliament,” Mr. Thomas said. “It’s the House of Commons, right? They’re supposed to be commoners.”

MPs’ pension arrangements are far more generous than what most Canadians can expect from their employer.

Today, MPs contribute relatively little for what they reap.

On paper it looks as if recently elected MPs supply $1 in annual pension plan contributions for every $5 to $6 anted up by the government.

William Robson, president of the C.D. Howe Institute, said the accounting of Members of Parliament pension plans is misleading and confusing. “The setup is so opaque that most MPs themselves don’t realize how generous it is.”

He says it’s more accurate to say that MPs through contributions only cover about one-tenth of the pension benefit that’s accruing every year.

What’s even more troubling about the political pension plan is that it’s unfunded – and merely paid out of government revenue.

“There’s not one cent backing those promises,” Mr. Robson said. “It’s got to come out of current tax revenue.”

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