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July 09, 2021

Politicians' gold-plated pension plans need further trimming: report

Gold-plated pensions for British MPs could be scrapped under an overhaul of parliamentarians’ pay.

Pensions and juicy severance packages paid to ousted politicians have been branded a reminder of the ‘old, cushioned world of privilege’ by Sir Ian Kennedy, the chairman of the Independent Parliamentary Standards Authority.

The watchdog is expected to unveil a scaling back of the ‘excessively generous’ pensions entitlements and golden goodbyes that many MPs enjoy as part of IPSA’s review of pay and expenses.

Might Canada be considering the same sort of move? They certainly should, maintains Gregory Thomas, federal director of the Canadian Taxpayers Federation.

Many federal politicians who decide to retire at the next election could easily walk away with millions of dollars from the lucrative parliamentary pension plan. And the CTF thinks that stinks.

“Politics shouldn’t be a vehicle for an individual to get rich and become a multimillionaire. Politicians shouldn’t be working for peanuts, but I don’t think most Canadians are aware of how lucrative these pension schemes have become,” Thomas told the Financial Post.

The CTF estimates the pension costs for many longtime MPs to be more than $100,000 a year for the rest of their lives. Indexed to inflation, the parliamentary plan will pay millions of dollars each to retired MPs should they live until age 90 — a not completely unreasonable assumption.

While the federal government has made several changes to its pension plan — including tripling MP contributions and increasing retirement age — they will only take effect after the next election. Might that affect those who decide to run again?

Click here for a list of current MPs and the pensions they will be able to collect when they turn 55 if they retire before the 2015 election.

Do you think that Canadian parliamentary pension plan reform has gone far enough? Or would favour the approach being advocated in Britain?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...