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Guest Columns: CTF Slams $23 Million Payday For The MP Pension Plan
By Gregory Thomas, CTF. The Canadian Taxpayers Federation (CTF) is reminding Canadians that Canada’s Members of Parliament will celebrate another big financial win June 30, with the quarterly deposit of another $23 million taxpayer dollars into the Parliamentary pension plan.
Under regulations adopted by cabinet, instead of investing pension funds into the market, MPs simply pay themselves interest at the end of every quarter at a compounded annual rate of 10.4 per cent. The fund has grown by $69 million in the past twelve months, and now tops $950 million.
“By charging taxpayers 10.4 per cent interest on their pension plan, MPs retirement savings continue to outperform just about every other pension plan in the country,” said CTF Federal Director Gregory Thomas.
“When you combine over $90 million of interest payments they’ve charged us with $26.7 million in taxpayer-funded contribution to their pension plan, they’ve helped themselves to $117 million in taxpayer funding, while putting in only $4.5 million themselves,” Thomas continued. “It’s highway robbery.”
For the year ending 2009-10, taxpayers contributed $102.6 million, while parliamentarians chipped in $4.4 million, a $23.30 to $1 ratio. In 2010-11, taxpayers contributed $110.7 million, while parliamentarians chipped in $4.5 million, a $24.36 to $1 ratio. And the CTF estimates that taxpayers contributed $25.81 to the parliamentary pension plan in 2011-12 for each $1 that federal politicians contributed.
By the end of the 2012-13 fiscal year next March 31st, at the current 10.4 per cent interest rate, the MP pension plan will top $1 billion – money to be shared between current and future MPs and Senators, 561 retired parliamentarians and their spouses.
“It certainly provides peace of mind, knowing that you are one of a thousand people with a piece of a billion-dollar nest egg,” said Thomas. “I can understand why there was nothing in the actual budget legislation about reforming MP pensions, even though action was promised in the Finance Minister’s budget speech.”
The 425-page budget bill amended 70 separate federal laws, and rightfully postponed the age that younger Canadians can begin to collect Old Age Security benefits from age 65 to age 67, but failed to reform MP pensions.
Thomas took the government to task for tabling the 2010-11 annual report on the MP pension plan nearly 12 months after the end of the fiscal year. “We’ve have to provide an estimate on the current state of the plan, because MPs won’t give us up-to-date numbers. The 2011 fiscal year ended three months ago and we probably won’t get to see the annual report until some time in 2013.”
Prior to the 2011 federal election, the average MP pension topped $55,000, but the average pension for 60 high-priced politicians who retired in 2011 was over $71,000.
“To put that in perspective,” said Thomas, “the average new Canada Pension Plan monthly pension in 2012 is $534.10. The average MP who retired last year is getting a monthly pension of $5,970.”
If Canada’s four million CPP pensioners were paid like the average newly retired MP, it would cost $284 billion, more than the entire $276 billion federal budget for 2012. MPs can start collecting their pension as early as age 55 after only six years of service. Thomas noted that the Parliamentary pension fund ‘returned’ 10.4 per cent in the past twelve months, while the S&P/TSX composite index lost 12.2 per cent. The Canada Pension Plan, which managed to report its results just 47 days after its year end, achieved a return of 6.6 per cent last year.
“Unlike the Canada Pension Plan or private pension plans, such as the Ontario Teachers’ Pension Plan, there are no investments and no assets to back up this billion-dollar boondoggle except the ability of MPs to raid the wallets of taxpayers whenever they choose,” said Thomas. “Yet, retired federal politicians cashed pension cheques for more than $53 million in the past 12 months, and none of the cheques bounced. Go figure.”
Gregory Thomas is the Federal/Ontario Director of the Canadian Taxpayers Federation.
He can be reached at : 1.800.265.0442
Or by email at: firstname.lastname@example.org