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Twillingate-Lewisporte MHA defends pension changes

Twillingate–Lewisporte MHA and Parliamentary Secretary Derek Bennett says proposed changes to MHA pensions will save taxpayers money in the long term.
Twillingate–Lewisporte MHA and Parliamentary Secretary Derek Bennett says proposed changes to MHA pensions will save taxpayers money in the long term.

TWILLINGATE—LEWISPORTE, NL - Government pensions are a bit of a mystery to the average Newfoundlander, at least if a recent social media post from Twillingate–Lewisporte MHA and Parliamentary Secretary Derek Bennett is any indication.

Bennett posted some details of the Liberals proposed changes to MHA pension plans in response to criticism on social media from a constituent. The provincial government announced its intentions regarding MHA pensions in March as previously reported in The Telegram: http://www.thetelegram.com/news/local/2017/3/3/new-mha-pension-scheme-will-drastically-reduce-benefits.html

The proposed changes would see MHA’s become eligible to participate in a defined contribution plan after two years of service. The proposal would also allow members to contribute up to nine percent of their annual salary, or $8,640 per year. The provincial government would then match the nine per cent, doubling the annual payout. Meaning rookie MHA’s could potentially walk away in defeat after four years of service with roughly $68,000 to console them. 

The changes are all in the name of financial prudence, according to Bennett.

“After our term that’s all we receive,” Bennett told the Pilot. “The Government of Newfoundland and Labrador wouldn’t be on the hook after that.”

Bennett says the funds are essentially kept in an RRSP, so once the member has left government there is no long term cost for the province to administrate the pension. The investment will gain interest, as would any RRSP, but at no cost to government. 

The proposal does go against a 2016 review of MHA salaries, allowances, pensions and severance conducted by the House of assembly appointed Members’ Compensation and Review Committee (MCRC). 

The report, released in November 2016, recommended MHA’s wait five years, or two elections, before becoming eligible to participate in the pension plan. It also recommended member contributions be reduced to a maximum of 2.5 per cent. 

Bennett says the figures are misleading. The system proposed by the MCRC allows participants to draw their pension from age 60 until death. Meaning long-term pension cost and perhaps unfunded liabilities. Bennett says the proposed Liberal system, while allowing for earlier participation, is a defined contribution plan. That difference is where government will find long-term savings.

“Under the current plan, if I served seven years and was eligible, I would have got somewhere around $16,000,” said Bennett. “I would get that $16,000 from age 60 until I die, so if I live to be 93 like my mother, the government will be paying me over $500,000.”

The exchange however did little to lessen the anger, or increase the understanding of constituents. The majority of commentary was negative, with some posting support for Bennett as well.

“People think MHA’s are getting this big pension,” said Bennett. “Even under the best case scenario, if nothing changed, and we were entitled to that 3.5 per cent, after eight years I would have a $19,000 pension.”

The Pilot reached out to the Newfoundland and Labrador Association of Public and Private Employees (NAPE) for comment. The union, which has been critical of the changes, says it will withhold comment until after the next meeting of the MCRC on May 10. The Pilot will provide an update as more information becomes available.

 

Patrick.murphy@SaltWire.com

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