TORONTO, Jan. 19, 2012 /CNW/ - Fixing rich, underfunded MP pensions is a
key step in pension reform, according to a report released today by the
C.D. Howe Institute. In "Fixing MP Pensions: Parliamentarians Must Lead
Canada's Move to Fairer, and Better-Funded Retirements," author William
B.P. Robson argues that the Pension Plan for Members of Parliament
(MPs), which covers members of the House of Commons and the Senate, is
the most problematic of federal employee pension plans.
"The MPs' plan promises very generous benefits, but has set aside
essentially no assets to pay them," says Robson, who is President and
CEO of the C.D. Howe Institute. "Realistically, gaining the moral
authority to lead Canada's search for a better retirement income system
means MPs must fix their own pensions first."
The report notes the MP plan promises much higher retirement incomes
than most Canadians can dream of: the implied accumulation of wealth in
these plans amounts to more than 50 percent of pay - with today's very
low yields on sovereign-grade securities, arguably closer to 70
percent. In addition, the plan has set aside essentially no assets to
pay future benefits: a realistic appraisal of its financial condition
would show, not the 'actuarial excess' of $176 million that appears in
the latest actuarial report, but a deficit as large as $1 billion.
Robson says MPs should put real retirement saving in a properly funded
pooled registered or target-benefit plan. Increases in MPs' current
compensation could compensate for their more modest retirement
benefits. The federal government, he says, should also legislate more
generous limits on tax-deferred saving, giving everyone a chance to
achieve retirement incomes closer to what MPs promise themselves.
"Canadians need better, and properly funded, pensions," concludes
Robson. "Federal MPs should lead by example."
For the report go to: http://www.cdhowe.org/pdf/BG%20146.pdf
SOURCE C.D. Howe Institute
For further information:
William B.P. Robson, President and CEO; or Alexandre Laurin, Associate Director of Research, C.D. Howe Institute, 416-865-1904. E-mail: firstname.lastname@example.org