Alberta MLAs move to enrich retirement pay

By Keith Gerein, Edmonton Journal October 19, 2012

EDMONTON – Alberta taxpayers could soon be on the hook for a pair of new financial perks for MLAs, as a legislature committee on Friday voted for an enriched RRSP benefit and reintroduced the idea of a transition payment for politicians leaving office.

While critics such as Wildrose Leader Danielle Smith blasted the move as another excessive infringement on the provincial treasury, PC MLAs on the members’ services committee defended the changes as necessary incentives to convince top candidates to leave their careers for public office.

“We made a decision we don’t want to go to pensions, but we still need a retirement package that is fair and clear,” said PC caucus whip Steve Young, who proposed the new perks.

The committee has been conducting an overhaul of MLAs’ pay and benefits. Recommendations from former Supreme Court Justice Jack Major for a simplified salary system were largely implemented earlier this year, but there has been disagreement about what sort of retirement benefits to offer

Under the old system, departing MLAs were given a lucrative “transition allowance” that saw former speaker Ken Kowalski walk away with $1.2 million and former premier Ed Stelmach take home nearly $1 million. Amid public outrage over such payouts, Premier Alison Redford campaigned to abolish transition allowances and the legislature followed through with a motion in May.

Various alternatives have since been discussed, including Major’s suggestion that MLAs receive a “defined benefit” pension that would provide a target return each year.

The members’ services committee rejected that option Friday, along with all other types of pensions, as potentially too risky for taxpayers, who could wind up on the hook for any unfunded liabilities in the pension plan.

Instead, the PC members of the committee moved to compensate departing MLAs through their personal RRSPs.

Under current rules, the maximum $22,970 that can be put into an RRSP is covered on a 50-50 basis, with taxpayers and MLAs each contributing half ($11,485). But the change approved Friday will see taxpayers cover 100 per cent of the tab.

“We cannot cut these people off with nothing when their time is over. The workload is incredible but so is the responsibility,” PC committee member David Dorward said.

Smith criticized the PC members as out of touch with average Albertans, who do not typically get 100 per cent of their RRSP contributions paid by their employers. She described the change as essentially a $11,485 pay raise for politicians.

“We are trying to get the kind of proposal that is available in the real world,” she said. “There normally is some kind of matching requirement. Taxpayers don’t have the opportunity to vote themselves a similarly generous contribution.”

Derek Fildebrandt, Alberta director of the Canadian Taxpayers Federation, said the only fair system is when MLAs put in the same amount as the public. NDP Leader Brian Mason said he would also like to see MLAs contribute something, though he didn’t say what the percentage should be.

In addition to the RRSP change, Young proposed outgoing MLAs be compensated with a “departing allowance.” Though essentially the same concept as a transition allowance, Young said his proposal would be much more modest since it would give MLAs one month’s salary for every year of service, up to maximum of 12 months. If eventually approved, backbenchers who serve 12 years or more would get an extra $134,000 when they left office, while cabinet ministers would take home a maximum $201,000.

Speaker Gene Zwozdesky, who chairs the committee, suggested the proposal was out of order since it appears to contravene the legislature’s decision in the spring to ban transition allowances.

The committee eventually voted to forward the issue to the legislature for debate.

“What we had before was too much, so we need to have one that reflects the transition into public life,” Young said. “Where Albertans were so offended was when long-standing folks came out with this big cheque that did not pass the smell test. With this (proposal), we’re seeing the best case scenario, as this is a reasonable cheque.”

Smith said she needed to discuss the “departing allowance” idea with her caucus before taking a position. However, she said the Tories seemed to be breaking Redford’s campaign promise of an end to transition allowances.

“That was a pledge of immense symbolic significance for the legitimacy of their re-election,” Fildebrandt said. “If they go back on this, it will be clear sign they only made the promise for the purpose of hanging onto power.”

Redford’s press secretary, Kim Misik, would not comment.

Mason said he needs time to consider the proposal, while Liberal Leader Raj Sherman abstained from voting, saying MLAs should not be setting their own pay and perks.

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