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During his 10 years on Parliament Hill, Pierre Pettigrew drew admiring stares for his elegant suits and swooping salt-and-pepper coiffure. But the Liberal politician didn’t just look like a million bucks. He also earned a million bucks. Actually, he did even better than that. As a cabinet minister between 1996 and 2006, he collected paycheques totalling more than $1.5 million. Even after he lost his seat in the 2006 election, the money kept flowing in. Like all fired MPs, Pettigrew qualified for a severance package, estimated to be worth $49,000 by the Canadian Taxpayers Federation. And that was just the down payment on a plush future. Three months after leaving Parliament, he celebrated his 55th birthday and could start collecting a parliamentary pension worth $76,000 a year. While it’s difficult to put an exact dollar figure on Pettigrew’s pension, it’s roughly equivalent to what a person of similar age could buy in the form of an annuity for $1.6-million.Pettigrew’s total take from a decade in public service? Between salary, pension and benefits, the equivalent of at least $3 million.
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For most MPs, election to Parliament has meant a very nice raise. Every MP earns at least $157,731 a year. The paycheque doesn’t vary by how long you’ve occupied your seat, or by your attendance in the Commons, or by your productivity. Each MP gets the same raise every year. The increase is based on the average hikes in pay negotiated by unions in the private sector. This year the raise was supposed to be 3.3%. But with the global economy imploding and the budget sinking back into deficit, MPs decided to cut their raise to 1.5%, or about an extra $2,000 a year per elected official. MPs boost their income if they become party whip or caucus chairman. You get an especially large bump if you’re appointed to cabinet, where each minister is paid $233,000 a year. Of course, the best-paying job of all is prime minister. Stephen Harper will earn $315,462 this year, double what backbenchers make.
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But the best perk of all comes when they leave office. MPs’ pensions have often been described as “gold-plated.” A more apt description is solid platinum with diamonds on top. To qualify for a pension, you have to serve as a member of Parliament for a mere six years. A backbencher with six years on the job who retired at the end of this year would receive an annual pension of $27,213 once he or she turns 55. Once you hit the six-year mark, your pension rises at dizzying speed. If the MP sticks around for another four years, his or her pension hits $45,355 a year. For you or me to receive an equivalent payout in retirement we would have to put $80,000 into our RRSPs each year for 10 years.
Thanks to their king-sized pensions, veteran MPs have little to worry about. The average MP who is eligible to collect a parliamentary pension takes in a very comfortable $49,985 a year. In fact, there are 70 ex-MPs who each collect more than $70,000 a year. “That’s more than a lot of people in Canada make working for a living,” fumes Kevin Gaudet, federal director of the Canadian Taxpayers Federation. Gaudet points out that MPs contribute only a fraction of the cost of their own pensions; most of their retirement deal is paid for by taxpayers like you and me. We contribute $3.65 for every $1 the politicians put into their own pension pot.
Over time, MPs’ pensions turn into million-dollar paydays. The National Citizens Coalition estimates that Bill Blaikie, a 58-year-old NDPer who spent 29 years in the House before quitting politics last year, will receive a total payout of more than $2.6 million by the time he turns 75. Monte Solberg, a Conservative cabinet minister, who also quit politics last year after 15 years as an MP, is only 51, so he will have to wait four more years to collect his pension. But once he does, he’ll collect $2.3 million over 20 years.
MPs’ pensions represent an extraterrestrial level of luxury, unmatched by any deal in the private sector. Not only are payouts lush for only a few years of service, but unlike private pension plans, the payments are backed by the full power of the federal government, so they are completely safe. In addition, the payouts rise in line with inflation once a retired MP hits 60, so our former elected officials have no worries about seeing the buying power of their pensions decline in years to come. The bottom line? If you can make it through six years as an MP, you never have to fret again about the stock market. “When you look at the average person today and how their RRSPs have been kicked around, these guys don’t have that problem,” says Peter Coleman, president of the National Citizens
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