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The Politics of Parliamentary Pensions in Western Democracies

Understanding MPs’ Self-Imposed Cutbacks

Anna Caroline Warfelmann

The author takes a close look at the politics of parliamentary pensions in Australia, Austria, Canada, and Germany and enlightens the reasons of self-imposed cuts by Members of Parliament. Members of Parliament in western democracies have been under growing pressure since they legislated first retrenchments of national social security systems. They are in a special situation because they have to decide about their own financial situation as well. Thus, it is surprising that they cut their own pension benefits in recent years. The book shows that the self-imposed cuts by Members of Parliament were related to public pension reforms but, in general, were less substantial.
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7 Reforming Parliamentary Pensions. Evidence from Australia: Aligning MPs and Government Employees

Extract



Members of the House of Representatives in Australia were covered by a special unfunded defined benefit parliamentary pension scheme since its introduction in 1948, the Parliamentary Contributory Superannuation Scheme (PCSS). More than a decade after the occupational superannuation plan was introduced for ordinary employees in 1992, an accumulated pension scheme was also implemented for MPs. As a consequence, all newly elected representatives are now covered by a defined contribution scheme, the Parliamentary Superannuation Act (PSA), which has been fully funded, since 2004. Both pension schemes had the same key parameters because the main aim was to align MPs’ occupational pension scheme with that of ordinary employees. A fully funded pension plan, which offered more generous benefits than the parliamentary and public superannuation plan, was also introduced for civil servants in 2005. As a result, MPs adjusted their pension scheme to the civil servant superannuation plan, thus improving their financial position.

7.1 Introduction

This section briefly outlines the Australian welfare state. Detailing the structure and the design of the public pension scheme will help explain the public pension reforms (7.3.1) and their chronological proximity to the parliamentary pension reforms (7.4.2). MPs’ financial support is also described, as it relates to the topic of MPs’ pension provisions.

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