HALIFAX — The Atlantic Institute for Market Studies is recommending that pensions for members of the Nova Scotia legislature be eliminated or drastically transformed.
The input from the Halifax think-tank comes as an independent review panel is expected to release its report on legislators’ pensions in the coming weeks.
The panel, headed by retired Supreme Court judge David Gruchy, started work in early May and was given six months to study the issue.
Legislators now receive up to 75 per cent of their salary in pension income and become eligible for retirement benefits after six years in office.
Don McIver, a Halifax economist and director of research at AIMS, said in a news release Tuesday that those terms are out of line with the retirement packages that most taxpayers get from their employers.
He said Nova Scotia’s level of responsibility for legislative pensions isn’t as great as larger, richer provinces.
“How come we’re giving you such generous salaries?” he said. “And especially, when you finish working for us, we take care of you for the rest of your life, and your
spouse for the rest of their life.”
The terms of the pensions were decided about 20 years ago and are the most generous for provincial politicians in the country, McIver said. While some Nova Scotia members are career politicians, most stay in office for less than 10 years, he said.
He said he would prefer to see politicians save for their own retirement or switch to a defined-contribution pension plan or an RRSP allowance.
Member pensions are now set up as defined-benefit plans that are ultimately calculated based on the number of years worked. They will be paid by future taxpayers and not, like RRSPs, out of funds set aside from year to year.
Eliminating the pensions altogether is not on the table, according to terms the panel set out and were approved last spring. Before beginning its review, the panel agreed that members are entitled to a reasonable level of retirement benefits.
“That level should not be so small as to discourage qualified persons from running, or so generous as to be a major inducement for seeking office,” the panel wrote in the terms of reference.
Actuary Bill Black, who studied public service pensions and emailed a recommendation to the pension panel this summer, said the current system lacks transparency and is setting taxpayers up for a burden they can’t easily calculate.
He said legislators’ pension funds should be planned carefully to avoid future shortfalls like the $1.5-billion public service pension deficit that was resolved this year.
The panel’s recommendations will not be binding.