PENSIONS TO HELP LIBERALS FROM BEING TOPPLED
MPS loathe to lose benefits if they drive them out too soon, Howard Levitt writes.
The other federal parties can, at any time, depose the Liberal minority government through a non-confidence vote. But they won’t for at least two years. Why? In part, because of parliamentary pensions.
Now that the Liberals are in a minority, the opposition parties control the committees, and Parliament itself, if they work collectively.
They can put before the public the secrets that the Liberals worked so assiduously to hide. Some of the information that former attorney-general Jody Wilson-raybould and others said they wished to share but were precluded from doing so, could potentially come out. The Liberals can no longer block committee hearings or prevent witnesses from testifying, although they can still invoke cabinet confidentiality and solicitor-client privilege.
One might think that the other parties would rush to bring down the Liberal party. After all, they made political mileage over the government’s refusal to release Wilson-raybould, former Treasury Board president Jane Philpott and others from cabinet confidentiality, despite how anxious witnesses were to tell their stories.
But that was before the election. There are two reasons that they won’t now. The first is that, if the Liberals are totally wiped out by the revelations, the Conservative party will likely get a majority and the NDP and Bloc Québécois will lose the upper hand in Parliament, with Liberals dependent upon them to enact legislation.
But one should never ignore the impact of a more mundane motivation: pensions.
MPS initially elected in 2015 are not eligible to claim their Parliamentary pension unless they remain in office until at least 2021. This is a defined benefit pension plan, pursuant to the Members of Parliament Retiring Allowances Act, which can be received regardless of interest rates or the market.
Such plans used to be relatively common in large private sector employers but they are so expensive that they drove many companies into insolvency. That is why you scarcely find them today outside of the public sector. An analysis by Frederick Vettese, author of the book, Retirement Income for Life: Getting More without Saving More, predicts that defined benefit plans will be extinct in the private sector by 2026 while continuing to grow in the public sector.
One might think it unfair that Parliamentarians receive pensions the vast majority of Canadian employers cannot afford for their own employees. But, for the same reason public sector unions are loathe to give them up, Parliamentarians are motivated to ensure that they work the requisite number of years to receive them. That is why they are unlikely to drive the Liberals out of office for at least two years.
In my practice, I have found that employees are loathe to leave their jobs before they receive a significant bonus or other potential entitlement. Few MPS are children of privilege or have created significant wealth themselves. So why topple the Liberals and call an election now, before they are guaranteed their pensions?
The traditional private-public sector dichotomy was that public sector employees had better benefits and pensions, enjoyed greater job security, worked less but, in return, earned less. Over the last number of years, that has reversed with public sector workers continuing to enjoy these advantages, particularly the defined benefit pension, but earning more as well.
Why is that? In the private sector, union and non-union alike, market discipline applies. If an employer provides wages that are too high, it goes out of business. Even unions understand that and, in my experience, are open to employers sharing their financial statements and modifying their demands to ensure their members keep their jobs.
In the public sector, market discipline does not apply. The government simply runs a deficit. Moreover, the people negotiating on the other side of the unions are directed by politicians whose main goal is to avoid a strike “on their watch.” The politicians simply defer the consequences of their lavish public sector benefits/pensions and the resulting deficits to later years.