MLA pensions will be reduced: Alward

The Progressive Conservative government will roll back generous MLA pensions will be introduced in the upcoming legislative session, Premier David Alward announced on Tuesday.
Premier David Alward speaks with reporters on Tuesday about his plans to roll back MLA pensions. (CBC)

The Progressive Conservative government will roll back generous MLA pensions in the upcoming legislative session, Premier David Alward announced on Tuesday.

The changes will apply to the 55 MLAs that are currently sitting in the legislative assembly, Alward said in an interview.

Alward's comments come after a review panel released a report on MLA pensions.

"What I can say is my understanding is it certainly will see a reduction in the level of pensions," Alward said on Tuesday.

"My understanding is it will have implications on severance packages as well."

Alward said he had not read the report but knew it involved a reduction to a more "conservative" pension plan.

The pension report recommended the new pension policy should reduce benefit accrual to three per cent from 4.5 per cent per year of service and cap it at 75 per cent of an MLA's salary.

As well, the report says MLAs should qualify for a pension after six years, which would amount to two elections, instead of eight legislative sessions. That would have allowed MLAs elected in the 2003 election and defeated in 2010 to collect pensions, which they cannot do under the current pension rules.

And the report calls for severance pay for defeated and retiring MLAs to be reduced. As well, those severance packages should not go to those who leave the legislature with a full pension.

The report's authors said the pension reforms, which were approved unanimously by the Liberals and the Progressive Conservatives in April 2008, made New Brunswick's pension plan one of the most lucrative.

"In comparison with pensions benefits for MLAs in other Canadian jurisdictions, New Brunswick's pension benefits, which were set out in the Members' Pension Act and based on a much lower [salary], were now much more generous than the norm," the report said.

The report was drafted by former judge Jean-Claude Angers and former senior civil servants, Carol Loughrey and Laura Freeman.

Pay hikes

New Brunswick MLAs voted themselves pay hikes to boost their salaries to $85,000 from about $45,000. In that move, they ended the practice of receiving allowances for committee work, which were worth roughly $35,000.

The MLA pensions are based on salaries, so the reform caused their pensions to nearly double to $30,000 a year after eight years of service.

The report recommends dropping that to $20,000 and capping the pension at 75 per cent of the annual salary for long-serving members.

Former Liberal MLA Larry Kennedy, who was defeated in the 2010 election, will receive a pension of $74,000 a year because of the 2008 changes.

The report calls for the provincial government to halt the "pension bonus."

"In our opinion, the government should make every effort to reverse the 'pension bonus' which was the direct result of converting the non-taxable, non-accountable expense allowance to [salary]," the report said.

"Because this was in place from April 1, 2008, until the time of the election in the fall of 2010 this was a major windfall for MLAs who did not return for whatever reason and were eligible to receive pensions."

The report points out that for long-time MLAs, under the 2008 rules, they could receive pensions that are higher than their former MLA salaries.