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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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8 Reforming Parliamentary Pensions. Evidence from Canada: ‘Notional Cutbacks’

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Canadian MPs implemented pension benefit cutbacks for themselves for the first time during the mid 1990s and later in 2001. As the analysis shows, these were minor (cosmetic) changes to the rather generous parliamentary pension scheme. Substantial retrenchment was not extensively discussed at the parliamentary level, although watchdog groups such as the Canadian Taxpayer Federation (CTF) and the National Citizens Coalition (NCC) exerted massive pressure.

In contrast to the other countries examined in this study, and despite the retrenchment of important parameters, parliamentary pensions in Canada will even rise in the future due to parliamentary remuneration increases. This is why I characterize parliamentary pension politics in Canada as ‘notional cutbacks.’ The topic of pensions for MPs was discussed again in 2012. The federal budget, which was released in March 2012, implied changes for the public’s and civil servants’ pension plans, such as a gradual increase of the official retirement age. Simultaneously, it proposed altering the contribution rate of the parliamentary pension scheme to make it less generous. While changes to the public pension schemes are to be implemented as soon as possible, the parliamentary pension plan reforms were delayed until the next legislative period (Minister of Finance 2012). This led to public outcry and put further reform pressure on current MPs, who finally legislated cutbacks to their own pension benefits in November 2012 – at the same time when the public pension retrenchment was legislated.

8.1 Introduction

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