Her Excellency the Right Honourable Adrienne Clarkson, C.C., C.M.M., C.D.
Governor General of Canada
Excellency:
I have the honour to submit to Your Excellency the Report on the Administration of
the Members of Parliament Retiring Allowances Act for the Fiscal Year
Ended
March 31, 2000.
Respectfully submitted,
The paper version was signed by Lucienne Robillard, President of the Treasury
Board.
Introduction
The Members of Parliament Retiring Allowances Act (the Act or MPRAA) governs
pension arrangements for members of Parliament --members of the House of Commons and
senators. Under the Act, the plan also provides a survivor allowance for eligible spouses
and children. This report begins with a brief summary of the plan's main provisions
and then presents information, for the fiscal year 1999-2000, on the
transactions recorded in the pension plan accounts, on membership and benefits paid.
Historical data are also included.
In this report, "members" refers to active and retired participants in the
plan. Where necessary, members of the House of Commons and senators are referred to
separately.
Funding
Accounts
Two accounts are operated under the plan: the Retiring Allowances (RA) Account and the
Retirement Compensation Arrangements (RCA) Account.
The RA Account records the transactions related to the benefits payable under the plan
when these benefits accord with income tax rules for registered pension plans. The RCA
Account records the transactions related to the benefits payable under the plan when the
benefits exceed the limits imposed by those tax rules.
Members' contributions
Members of the House of Commons are required to contribute 9 per cent of their
sessional indemnities and senators are required to contribute 7 per cent. Some
members also receive additional allowances and salaries as speakers, ministers, leaders of
the opposition, parliamentary secretaries and so forth. A member must contribute to the
plan, based on these additional allowances and salaries, unless a member elects not to
make such contributions or to contribute at a lower rate. The prime minister must
contribute 7 per cent on the salary paid to him or her as prime minister in addition
to the contributions required as a member of the House of Commons. Any member can decide
to contribute for prior service in Parliament, in which case the member must pay interest
on past service contributions.
Government contributions
Monthly, the government is required to contribute an amount to each account --net
of members' contributions --that will fund the costs of all future benefits that
members have earned during that month. The government contribution rate for each account
varies from year to year and can be expressed as a multiple of members'
contributions. The ratios of government contributions to members' contributions for
the calendar years 1999 and 2000 were as follows:
MULTIPLE OF MEMBERS' CONTRIBUTIONS |
|
1999 |
2000 |
|
House of Commons |
|
|
RA Account |
3.06 |
3.22 |
RCA Account |
6.81 |
6.72 |
Senate |
|
|
RA Account |
1.90 |
1.88 |
RCA Account |
2.99 |
2.68 |
|
Interest
Every quarter, the government credits interest on the balance of each account at a
rate set by regulations. For the fiscal year ended March 31, 2000, the interest
rate was 2.5 per cent per quarter.
Future unfunded liabilities
When the government identifies an unfunded liability after it tables a valuation report
in Parliament, the government must cover that liability by equal annual credits to
the accounts over a period not exceeding 15 years.
Tables 1 to 4 in this report present current and historical data on the RA and
RCA accounts.
Allowances and Other Benefits
Annual allowance
Members
Upon ceasing to be a member of Parliament, members are entitled to an annual allowance
after they have contributed under the plan for at least six years. For service up to and
including July 12, 1995, former members are entitled to an immediate annual
allowance. For service after that date, former members are not entitled to an annual
allowance until they are 55.
The benefit accrual rate for members of the House of Commons is 5 per cent up to
and including July 12, 1995, and 4 per cent per year of service after that date,
to a maximum of 75 per cent of the average sessional indemnity.
For senators, the accrual rate is 3 per cent per year for a maximum of
25 years. The amount of the annual allowance is based on the member's
average pay for the best six years.
The annual allowance of a retired member is suspended if that person becomes a member
again, either as a member of the House of Commons or as a senator. The
annual allowance of a retired member of the House of Commons is also suspended if
that person starts working for the federal government.
Prime minister
During their tenure as prime minister, incumbents must contribute for at least
four years if this service is to be eligible for an allowance. The allowance will be
paid once the prime minister is no longer a member of Parliament or is 65 years
old, whichever comes later. The allowance is equal to two thirds of the annual salary
payable to a prime minister at the time the payment of the allowance begins.
Withdrawal allowance
Some members may get a withdrawal allowance. This is a return of a member's
contributions along with interest on those contributions at a rate set by regulations.
Members get withdrawal allowances if they do not complete six years of contributory
service, if they are expelled from the House of Commons or if they leave the Senate
by reason of disqualification.
Survivor allowance
Members
Eligible spouses and children of members may receive an allowance.
For spouses, this allowance is equal to three fifths of the basic annual allowance that
the member would have been entitled to receive, or that the retired member was receiving,
immediately before his or her death.
If a child is under the age of 18 or is a full-time student between the age of 18 and
25, that child is entitled to a survivor allowance. This allowance is equal to one tenth
of the member's basic annual allowance or two tenths if no spousal allowance is being
paid.
Prime minister
An eligible surviving spouse receives an allowance equal to one half of the allowance
payable to a former prime minister for service as prime minister.
Indexing
Allowances to retired members and survivors are adjusted at the beginning of
each calendar year. This adjustment corresponds to the percentage increase in the
average of the Consumer Price Index (CPI) for the 12 months ended on the preceding
September 30, over the CPI average for the 12 months ended a year earlier.
Indexing payments do not begin until the former member is 60 years old. But once
indexing begins, payments reflect the cumulative increase in the CPI since the member left
Parliament.
Survivor allowances are indexed immediately based on the date a member left Parliament.
Minimum benefit
When a member or retired member dies, and when there are no survivors entitled to an
allowance, then the member's estate receives the amount by which the member's
contributions exceed any allowances already paid.
Contributors
At March 31, 2000, there were 399 members contributing under the plan, and
one vacant seat in the House of Commons. Tables 5 and 6 in this report present
information on the number and distribution of allowances.
TABLE 1 |
Members of Parliament Retiring Allowances Account (in
dollars) |
|
|
Fiscal Year
1999-2000 |
Fiscal Year
1998-99 |
From Inception to
March 31, 2000 |
|
Receipts |
|
|
|
Members' contributions, current |
978,229 |
971,713 |
35,727,351 |
Government contributions, current |
2,673,500 |
2,261,588 |
45,010,291 |
Members' contributions, arrears
on principal, interest and
mortality insurance |
76,697 |
110,231 |
5,311,286 |
Government contributions on
amounts payable (re elections) |
- |
- |
3,226,108 |
Interest |
29,409,145 |
27,620,578 |
229,870,888 |
Transfer from the Supplementary
Retirement Benefits Account |
- |
- |
9,941,788 |
Actuarial liability adjustment |
- |
- |
158,000,000 |
|
|
Total Receipts |
33,137,571 |
30,964,110 |
487,087,712 |
|
|
Disbursements |
|
|
|
Annual allowances |
15,311,534 |
15,211,454 |
173,921,592 |
Withdrawal allowances including interest |
149,676 |
17,013 |
7,472,684 |
Pension division payments |
530,339 |
656,901 |
2,249,838 |
Transfers to Public Service
Superannuation Account |
- |
- |
294,211 |
|
|
Total Disbursements |
15,991,549 |
15,885,368 |
183,938,330 |
|
|
Excess of Receipts over Disbursements |
17,146,022 |
15,078,742 |
303,149,382 |
|
TABLE 2 |
Retirement Compensation Arrangements Account
(in dollars) |
|
|
Fiscal Year
1999-2000 |
Fiscal Year
1998-99 |
From Inception to
March 31, 2000 |
|
Receipts |
|
|
|
Members' contributions, current |
1,248,721 |
1,267,421 |
11,094,204 |
Government contributions, current |
7,397,670 |
6,902,331 |
63,917,282 |
Interest |
4,458,146 |
3,769,295 |
21,221,617 |
|
|
Total Receipts |
13,104,537 |
11,939,047 |
96,233,103 |
|
|
Disbursements |
|
|
|
Annual allowances |
1,017,774 |
976,109 |
5,673,658 |
Withdrawal allowances |
81,963 |
76,253 |
2,016,291 |
Pension division payments |
382,398 |
37,680 |
515,605 |
Refundable tax1 |
5,790,772 |
5,101,490 |
42,528,863 |
|
|
Total Disbursements |
7,272,907 |
6,191,532 |
50,734,417 |
|
|
Excess of Receipts over Disbursements |
5,831,630 |
5,747,515 |
45,498,686 |
|
1 A refundable tax equal to 50 per cent of contributions and interest
credited to the RCA Account, less 50 per cent of benefits paid out of the account,
must be remitted each year to the Canada Custom and Revenue Agency.
TABLE 5 |
New and Past Allowances |
|
During the fiscal year 1999-2000, 1. The following 18 new
allowances became payable:
4 to former senators
2 to the surviving spouses of former senators
2 to former members of the House of Commons who were re-instated
2 to former members of the House of Commons retired to pension
8 to surviving spouses of former members of the House of Commons |
2. The following 26 allowances ceased to be payable: (a) to persons who
died
12 former members of the House of Commons
2 senators
3 former senators
6 spouses of former members of the House of Commons
1 spouse of a former senator
1 child's allowance of a former member of the House of Commons terminated due to
age
(b) to one former member of the House of Commons whose eligibility was suspended
on becoming employed by the federal government |
3. Withdrawal allowances (i.e. return of members' contributions
with interest) were paid in respect of three
senators who retired. |
Since the Act came into force on November 20, 1952, a total of
1,034 annual allowances and 854 withdrawal allowances have been authorized. |
|
TABLE 6 |
Distribution of Annual Allowances in Pay |
|
The distribution of annual allowances in pay (including
applicable indexation) at March 31, 2000, was as follows: |
Amount of
Allowance |
Former
Members |
Surviving
Spouses |
Dependant
Children |
Total |
|
Over $70,000 |
16 |
- |
- |
16 |
65,000 - 69,999 |
10 |
- |
- |
10 |
60,000 - 64,999 |
9 |
- |
- |
9 |
55,000 - 59,999 |
11 |
- |
- |
11 |
50,000 - 54,999 |
43 |
- |
- |
43 |
45,000 - 49,999 |
34 |
1 |
- |
35 |
40,000 - 44,999 |
22 |
- |
- |
22 |
35,000 - 39,999 |
36 |
6 |
- |
42 |
30,000 - 34,999 |
62 |
18 |
- |
80 |
25,000 - 29,999 |
55 |
9 |
- |
64 |
20,000 - 24,999 |
26 |
26 |
- |
52 |
15,000 - 19,999 |
19 |
13 |
- |
32 |
10,000 - 14,999 |
24 |
17 |
- |
41 |
5,000 - 9,999 |
23 |
27 |
- |
50 |
Up to 4,999 |
- |
5 |
3 |
8 |
Totals |
390 |
122 |
3 |
515 |
|
Notes
1. In addition to the above allowances, a former member was in receipt of an indexed
annual allowance for service as prime minister.
2. The average annual allowance, including indexation, was $35,604 for former
members of the House of Commons and $43,789 for former senators.
|