Northwest Territories MLA pension funds hit by pandemic
COVID-19 losses come after end of long taxpayer contribution holiday
The COVID-19 pandemic has hit mutual funds and other investments hard, including the funds Northwest Territories MLA pensions rely on.
Like N.W.T. MLA salaries, expense allowances and other benefits, their two pension plans, together, provide them with among the most generous pension benefits of any politicians in Canada.
"The plans did struggle," said actuary John Slipp, during a briefing of MLAs on the Legislative Assembly's Board of Management last week. "Returns were, for the month of March, approximately minus eight per cent, minus nine per cent, somewhere in there."
But Slipp said the plans, which have a combined value of about $55 million, will not require any significant increase in taxpayer contributions as a result of the loss.
"For the most part the plans are still relatively healthy on a going-concern basis," he said. "We don't see any sharp jumps in contributions in the coming years."
Contribution holiday over
For many years the plans have enjoyed such good returns that taxpayers have not had to contribute to them. But that's changed in recent years, as investment returns have fallen.
MLAs also went years without having to contribute to their second, or supplementary, pension plan.
That's the opposite of what the public was told when the supplementary plan was re-introduced a few years after members of the 13th Legislative Assembly did away with it to set an example during a time of government cutbacks and layoffs.
When it was re-introduced by MLAs in the 14th Legislative Assembly, members who supported it emphasized that it was not a free benefit and that MLAs would have to contribute to the plan, according to Hansard, the official record of what is said in the legislature.
According to the territorial budget, taxpayers contributed $1.6 million to members' pension expenses in 2018-19, approximately $2.4 million in 2019-20 and will contribute an estimated $2.1 million this year.
Those expenses include the cost of administering the pensions. One of those costs last year was a Dec. 1-4 trip to Vancouver to speak with pension managers. All five MLAs on the Board of Management went, along with four staff, at a cost of $22,886, according to the legislative assembly.
CBC made numerous requests to MLA Frederick Blake Jr. to speak about that trip, but has so far not received a response. The Mackenzie Delta MLA is Speaker of the assembly and chairs the Board of Management. He has not responded to any of the requests.
On Friday CBC sent an email to Blake and the four other MLAs on the board — Diane Thom, Caitlin Cleveland, Jackie Jacobson and Paulie Chinna — asking why it was necessary for the entire board and four staff to travel to Vancouver, and how taxpayers benefited from the trip.
Cleveland was the only MLA to respond. She said the board discussed bringing the managers to Yellowknife for the briefing, but was advised that was more expensive. Cleveland said she felt it was better to have the meeting in person.
"It being a big responsibility I wanted to make sure I was doing my due diligence," said the Kam Lake MLA. "During our meetings every single person asked a ton of questions."
A legislative assembly official also responded to the email to MLAs, saying she would provide answers early this week. None were received by deadline.
Benefits of being a member
The plans allow MLAs, on retirement, to receive pension benefits amounting to up to 75 per cent of their average best four years of earnings, including extra pay for roles such as chairing committees, serving on cabinet and serving as Speaker.
MLAs are required to contribute a total of nine per cent of their pay to the two plans. They receive four per cent of their average best four years of earnings multiplied by their years of service.
Both pensions are what's known as a defined benefit pension plans. That means taxpayers must make whatever contributions are required, in addition to the fund earnings and contributions of members, to pay the benefits members are entitled to.
In the N.W.T., for example, a member who serves one term as an MLA and then a second term as a cabinet minister qualifies for a pension of about $53,027 per year at age 60 (not including annual cost-of-living increases). Unlike most pensions, MLAs' are not reduced by the amount of Canada Pension Plan benefits they receive. CPP benefits are paid on top of their government pensions.
By comparison, MLAs in B.C. contribute 11 per cent of their pay and get 3.5 per cent of their average pay times their years of service. Federal MPs contribute 19.5 per cent of their income and collect three per cent of their best average annual pay multiplied by years of service.
The N.W.T. pensions are fully indexed to inflation. MLAs qualify for benefits after serving four years in office.