The recent results of the Canadian election meant that some Elected Members of Parliament (MP's) were thrown out of a job. It was not all bad news for those who lost, many end up with pensions in excess of one million dollars.
As the results of the recent Canadian federal election were released so too were the results of the pensions of those MP's that were not returning to parliament. The Canadian Taxpayers Federation (CTF) put together a controversial list of pensions and the amount of money the outgoing MP;s would be receiving from those pensions. Not only were Canadian taxpayers shocked by the amount of the pensions, so too were the MP's receiving them.
In one interesting media debate the head of the CTF debated on television the MP pensions. The outgoing MP in the debate was incredulous himself at the amount of pension he would be receiving.
Over the past the CTF has been instrumental in bringing to the forefront the issues around the gold-plated pensions that Canadians pay their elected officials. It is an issue that is unfair for all taxpayers, many who will struggle to finance a proper retirement for themselves, yet fund a gold-plated pension for MP's who qualify in a little as 6 years.
Pensions are an important issue and if politicians are first at the trough how can they be asked to provide restraint for the pensions of our employees in the public sector?
With the current focus on MP pensions, Canadians must recognize that pensions for the larger public sector are a much bigger problem than those of politicians. Moist pensions for politicians pale in size to those for government senior executives.
Pension reform for public sector employees is urgent and we have seen the pension tsunami sweep over the UK and the United States. It is on its way to Canada
The most important issues to be addressed are the early retirement ages of the public sector and the amount of pensions that we pay our public servants. A retirement as early as age 50 is unfair for taxpayers and at 70% replacement income. When we calculate reduced income tax, CPP contributions and other work related expenses most public sector employees retire with more disposable income than when they are working. This is simply unsustainable.
Almost all public sector employees have pensions based on the same formula. They will earn of 70% of an average of the final years of working income.
Employees at the higher income levels get this same 70%. In Ontario 71,000 employees are on the Sunshine List, the list of provincial and municipal employees earning over $100,000 per year, and most of them will qualify for $70,000 per year in pension income, including CPP pension. In addition there are thousands on the list who will have pensions over $100,000 per year and hundreds who will have pensions in excess of $200,000 or $300,000 per year. A a pension cap to cap pensions is necessary, with an annual limit and two times the industrial wage which is around $85,00 seems like a reasonable amount. This means an employee on the Sunshine List would be earning around $120,000 to qualify for a pension of this size including the Canadian Pension Plan pension.
Sign up and let your voice be head. You can go the website of the CTF and sign their petition to reign in MP pensions.
Bill Tufts is the curator of Fair Pensions For All