Finance Minister Wes Sheridan and Premier Robert Ghiz before the first question period of the fall sitting of the P.E.I. legislature Wednesday.
Provincial politicians in P.E.I. will have to contribute more to their pensions and will no longer receive guaranteed cost-of-living increases as a result of changes announced by the commission that oversees MLA pensions and pay.
After an extensive review of the province’s MLA pension plan, the Indemnities and Allowances Commission has decided to increase plan member contributions by one per cent.
This will raise the amount MLAs contribute to their pension plan to nine per cent of their salary.
Also, effective Jan. 1, 2015, cost-of-living increases, also known as indexation, will no longer be guaranteed.
Future indexation for MLA pension benefits will be provided at the same level as indexation granted to civil servants.
Last fall, the province eliminated guaranteed cost of living increases to civil servants’ pension benefits as part of a major overhaul of P.E.I.’s two public sector pension plans.
Beginning in 2017, indexation will only be awarded if the pension funds perform well.
When he first announced the controversial reforms, Premier Robert Ghiz told reporters he had sent a letter to the Indemnities and Allowances Commission, asking it to make the same adjustments to the MLA pension plan.
The changes announced in the commission’s latest report do just that, although the report does not specify whether this change was made as a result of Ghiz’s request.
The commission also raised MLAs’ age of eligibility for pension benefits from 55 to 57, effective after the next election.
The MLA pension plan is just one of two pensions awarded to members of the legislative assembly.
The second, supplementary plan offers approximately equal benefits to the MLA plan, but is unfunded. That means government covers all premiums and MLAs do not have to pay into it.
The province is also responsible for any unfunded liability in this plan and makes payments from its operating fund as they become due, according to the 2012-13 audited public accounts report.
In its recent report, the Indemnities and Allowances Commission did not specify any changes to indexation in the supplementary pension plan.
It did, however reduce the accrual rate on benefits from the supplementary plan by 0.5 per cent. This change will take place after the next election.
“We just received the report from the Indemnities and Allowances Commission. It seems to very similarly reflect recent changes to the public sector pension plans,” Finance Minister Wes Sheridan said in a written statement to The Guardian.
“We thank the commission for its hard work.”
Decisions by the Indemnities and Allowances Commission are binding.