Report on the Administration of the Members of Parliament Retiring Allowances Act for the Fiscal Year Ended March 31, 2023
Her Excellency the Right Honourable Mary Simon, C.C., C.M.M., C.O.M., O.Q., C.D.,
Governor General and Commander-in-Chief of Canada
Excellency:
I have the honour of submitting to Your Excellency the Report on the Administration of the Members of Parliament Retiring Allowances Act for the Fiscal Year Ended March 31, 2023.
Respectfully,
Original signed by
The Honourable Anita Anand, P.C., M.P.
President of the Treasury Board
Table of contents
About this report
This report provides information on the administration of the Members of Parliament Retiring Allowances Act (MPRAA) for the fiscal year ended March 31, 2023. It is tabled in Parliament in accordance with section 67 of the MPRAA.
The MPRAA governs the Members of Parliament Pension Plan, which provides retirement allowances to eligible individuals who have served as parliamentarians.
About the plan
The Members of Parliament Pension Plan offers a source of lifetime retirement income for eligible parliamentarians.Footnote 1 In the event of a plan member’s death, it also provides benefits to the eligible survivor and dependent children.
Established in 1952, the plan is a contributory defined benefit pension plan. This means that both the employer (the Government of Canada) and the plan member contribute to it and that the benefits are specified in the plan document, in this case, the MPRAA and its regulations.
Membership in the plan has been mandatory since 1965 for members of the Senate, and since 2000 for members of the House of Commons. Both active plan members and the Government of Canada contribute to the plan, at rates set by the Chief Actuary of Canada. Since 2017, they have been contributing equally.
Fiscal year highlights
| Average annual retirement allowance | $77,900 |
|---|---|
| Benefits paidtable 1 note * | $51.8 million |
| Plan member and government contributions | $39.3 million |
Table 1 Notes
|
|
| Active plan members | 422 |
|---|---|
| Retired plan members | 579 |
| Survivors and dependent children | 190 |
| Total | 1,191 |
Benefits
-
In this section
A plan member’s benefits are based on the number of years of pensionable service at retirement, when that service was accrued, the age at which they start receiving benefits, and whether they retire because of a disability.
When a member dies, their eligible survivor and dependent children also receive benefits under the plan.
Members may receive their benefits in one of the following ways:
- a retirement allowance
- a withdrawal allowance
- a disability pension
Retirement allowance
Plan members who have 6 or more years of pensionable service receive a retirement allowance when they retire.
The earliest age at which a retirement allowance may be paid without a reduction is 65 for pensionable service accrued on or after January 1, 2016.
A member can choose to start receiving a retirement allowance at age 55, but the allowance will be reduced by 1% for every year the member is under age 65.
Table 1 shows the age at which different retirement benefits are available to eligible plan members based on when the service was accrued.
| When service was accrued | Type of benefit | Age payable |
|---|---|---|
| On or before July 12, 1995 | Immediate unreduced retirement allowance | any age |
| From July 13, 1995, to December 31, 2015 | Immediate unreduced retirement allowance | 55 |
| On or after January 1, 2016 | Immediate unreduced retirement allowance or |
65 |
| Immediate and permanently reduced retirement allowance | 55 |
Withdrawal allowance
Plan members receive a withdrawal allowance if they:
- have not completed 6 years of pensionable service
or - are disqualified from the Senate or expelled from the House of Commons
The withdrawal allowance is a reimbursement of all the member’s contributions paid under Part I and Part II of the MPRAA, plus interest, calculated at the rate of 4%, compounded annually.
Disability pension
A parliamentarian who becomes eligible for a disability allowance under the Canada Pension Plan (CPP) or Québec Pension Plan (QPP) may be entitled to a monthly disability pension under the MPRAA. There are no age requirements associated with the MPRAA disability pension entitlement.
The disability pension is calculated in the same way as a pension benefit that would have been payable to a plan member at age 65.
Survivor benefits
When a plan member with at least 6 years of pensionable service dies, their eligible spouse or common-law partner may receive a survivor benefit. Eligible dependent children may receive a child benefit.
Table 2 provides an overview of the different survivor benefits.
| At the time of death, if the member had… | the plan may pay… | and the benefit is… |
|---|---|---|
| a spouse or common‑law partner | a survivor benefit | a monthly allowance equal to 60% of the plan member’s basic retirement allowance, payable immediately, for the lifetime of the spouse or common-law partner |
| dependent children | a child benefit | a monthly allowance equal to 10% of the plan member’s basic retirement allowance, payable to each child until age 18, or until age 25 if the child is a full-time student, to a maximum of 30% of the plan member’s basic retirement allowance |
| dependent children, but no spouse or common-law partner | a child benefit | a monthly allowance equal to 20% of the plan member’s basic retirement allowance, payable to each child until age 18, or until age 25 if the child is a full-time student, to a maximum of 80% of the member’s basic retirement allowance |
| no eligible survivor or dependent children | a minimum benefit | a lump-sum payment equal to the total of the plan member’s contributions over and above allowances already paid, plus interest, calculated at the rate of 4%, compounded annually; this payment is payable to the plan member’s estate |
If the plan member did not have 6 years of pensionable service and was therefore not eligible for a retirement allowance, a withdrawal allowance is paid. If there is no eligible person to whom this benefit may be paid, it is paid to the estate.
Indexation
Retirement allowances, survivor benefits and disability pensions under the plan are indexed annually to cover increases in the cost of living, as determined by the Consumer Price Index (CPI).
The indexation rate was 6.3% for calendar year 2023 and 2.4% for calendar year 2022.
Calculation of benefits
A plan member’s benefits are based on their years of pensionable service and their average annual sessional indemnity or average annual pensionable earnings, depending on when the service was accrued.
Benefits for pensionable service accrued on or after January 1, 2016, are coordinated with the CPP and QPP. This means that a plan member’s retirement allowance has 2 separate components:
- a lifetime pension benefit, payable until the plan member’s death
- a bridge benefit, payable until the plan member reaches age 60
The bridge benefit is an amount payable in addition to a plan member’s monthly pension. It continues until the age of 60 or until a member becomes entitled to a disability pension under the CPP or QPP.
The Chief Actuary of Canada sets both the member contribution rates and the CPP coordination factor for the bridge benefit. The Chief Actuary regularly reviews both figures and adjusts them, if necessary, as part of their triennial actuarial valuation report, which is tabled in Parliament.Footnote 2
To be eligible for the bridge benefit, plan members must:
- have at least 6 years of pensionable service
- have earned pension benefits on or after January 1, 2016
- cease to be a parliamentarian before age 60
Table 3 shows how the retirement allowance is calculated. Table 4 shows how the bridge benefit is calculated.
| Lifetime pension benefit (maximum 75% accrualTable 3 footnote *) | ||||
|---|---|---|---|---|
| For pensionable service earned before January 1, 2016 | ||||
| 3% (or applicable rate) |
× | Average annual sessional indemnity | × | Years of credited pre-2016 service |
| For pensionable service earned after December 31, 2015 | ||||
| 2.6% up to average maximum pensionable earnings (AMPE) 3% above AMPE |
× | Average annual pensionable earnings | × | Years of credited post-2015 service |
| Bridge benefit (payable on post-2015 service) | ||||
|---|---|---|---|---|
| 0.4% | × | Average annual pensionable earnings up to AMPE | × | Years of credited post-2015 service |
Plan provisions for prime ministers
-
In this section
Retirement allowance
A prime minister who holds office for at least 4 years is entitled to a special retirement allowance in addition to their Members of Parliament Pension Plan benefit. Former prime ministers can receive a retirement allowance at age 67 or upon ceasing to hold office, whichever is later.
Table 5 shows the basic formula for calculating a prime minister’s retirement allowance.
| 3% | × | Prime minister’s salary on the date plan membership ends, or at age 67, whichever is later | × | Years of service as prime minister |
Table 5 Notes
|
||||
Survivor allowance
An eligible spouse or common-law partner may receive a survivor allowance equal to 50% of the retirement allowance payable to the former prime minister for service as prime minister.
Plan financial status
Accounts
Two accounts are maintained in the Public Accounts of Canada to record transactions under the plan:
- Members of Parliament Retiring Allowances (MPRA) Account
- Members of Parliament Retirement Compensation Arrangements (MPRCA) Account
The MPRA Account records the transactions related to the benefits payable under the plan when these benefits are permitted under the Income Tax Act for registered pension plans.
The MPRCA Account records the transactions related to the benefits payable under the plan when the benefits exceed the limits established by the Income Tax Act.
The MPRCA Account is registered with the Canada Revenue Agency. Transactions are recorded annually between the MPRCA Account and the Canada Revenue Agency either to remit a 50% refundable tax in respect of the net contributions and interest credits or to credit a reimbursement based on the net benefit payments. For the fiscal year ended March 31, 2023, the MPRCA Account remitted a refundable tax of $181,935.
MPRA and MPRCA account data is presented in the Account transaction statements.
Actuarial valuation
As required by the Public Pensions Reporting Act, the Chief Actuary of Canada conducts an actuarial valuation of the pension arrangements established under the MPRAA at least every 3 years.
This valuation presents an estimate of the balance sheet on an actuarial basis, which means that it presents the account balances and liabilities and any resulting excess or shortfall. The actuarial valuation also projects the current service cost for each of the 3 years following the valuation date.
The most recent actuarial report for the plan, which has a valuation date of March 31, 2022, was tabled in Parliament on November 24, 2023.
Member contributions
Plan members must contribute to the plan for as long as they remain parliamentarians.
Contributions are based on pensionable earnings. The coordination of benefits with the CPP and QPP means that plan members pay different contribution rates on different portions of their pensionable earnings. They pay one rate on the portion that is below the year’s maximum pensionable earnings (YMPE), another rate on the portion that is at or above the YMPE up to the earnings limit (EL), and another rate on the portion that is above the EL (see tables 6 and 7).
Contributions are made until they reach the maximum benefit accrual rate of 75%. Once they have reached that maximum, the contribution rate drops to 1% of pensionable earnings for the remainder of their service.
Some plan members, such as speakers, Cabinet ministers, leaders of the opposition and parliamentary secretaries, receive additional allowances and salaries. They make contributions based on these additional amounts in the same manner and at the same rates as indicated in tables 6 and 7.
Table 6 shows plan member contribution rates to the MPRA Account for calendar year 2023.
| Under age 71 | Age 71 and above | ||
|---|---|---|---|
| Below YMPE | YMPE to EL | Above EL | |
| 13.67% | 17.45% | 0.00% | 0.00% |
Prime ministers must contribute at the applicable contribution rate based on their salary received as prime minister, in addition to their contributions as a member of the House of Commons.
If eligible, a plan member can choose to make contributions on prior service in Parliament, but they must pay interest on these contributions.
Retirement compensation arrangement
The Income Tax Act defines the limit on which benefits can be earned under a registered pension plan during a calendar year. Retirement compensation arrangements provide benefits on pensionable earnings that exceed that limit. On January 1, 2016, the earnings limit formula was revised to reflect the coordination with the CPP and QPP.
Plan members under age 71 contribute a portion of their pensionable earnings, up to the EL for that year, to the MPRA and MPRCA accounts until they have earned a retirement allowance equal to 75% of the average pensionable earnings. Once a plan member has reached the EL for the calendar year, they contribute a certain percentage to the MPRCA Account as established under the MPRAA.
Table 7 shows plan member contribution rates to the MPRCA Account for calendar year 2023.
| Under age 71 | Age 71 and above | |
|---|---|---|
| Below EL | Above EL | |
| 7.26% | 23.34% | 23.34% |
Government of Canada contributions
Every month, the Government of Canada is required to make contributions to the MPRA and MPRCA accounts. These contributions match those made by plan members toward benefits earned during the month. The government’s contribution rates are presented as a percentage of the pensionable payroll.
The Government of Canada’s current service contribution rates are as follows:
- MPRA Account: 12.47%
- MPRCA Account: 10.87%
Interest
Every quarter, the Government of Canada credits interest on the balance of the MPRA and the MPRCA accounts at a rate set under the Members of Parliament Retiring Allowances Regulations. The interest is the effective quarterly rate derived from the valuation interest rate used in the most recently tabled valuation report. For the fiscal year ended March 31, 2023, the quarterly interest rate was 0.40%.
Credits and debits to the accounts
If there is an unfunded actuarial liability in either the MPRA Account or the MPRCA Account, the MPRA Account or the MPRCA Account must be credited with such amounts that, in the opinion of the President of the Treasury Board, on the basis of actuarial advice, would be necessary to meet the total costs of all allowances and other benefits payable under the plan. Conversely, if the balance of the accounts is greater than the actuarial liability, the President of the Treasury Board has the authority, based on actuarial advice, to debit amounts from the MPRA Account or the MPRCA Account.
For the fiscal year ended March 31, 2023, no actuarial adjustment was required to meet the total cost of all allowances and other benefits payable under the plan.
Account transaction statements
| 2023 | 2022 | |
|---|---|---|
| Opening balance | $628,748 | $631,362 |
| Receipts and other credits | ||
| Member contributions: current service
|
10,931 | 10,445 |
| Member contributions: arrears of principal, interest and mortality insurance
|
15 | 69 |
| Government contributions: current service
|
10,931 | 10,445 |
| Interest
|
10,468 | 10,103 |
| Total receipts and other credits | $32,346 | $31,061 |
| Payments and other charges | ||
| Retirement allowances
|
30,805 | 30,254 |
| Withdrawal allowances, including interest
|
132 | 3,177 |
| Pension division payments
|
0 | 244 |
| Total payments and other charges | $30,937 | $33,675 |
| Closing balance | $630,157 | $628,748 |
Note: Due to rounding, the totals may not correspond with the sum of the component figures. |
||
| 2023 | 2022 | |
|---|---|---|
| Opening balance | $239,364 | $277,869 |
| Receipts and other credits | ||
| Member contributions: current service
|
8,690 | 8,533 |
| Member contributions: arrears of principal, interest and mortality insurance
|
70 | 62 |
| Government contributions: current service
|
8,690 | 8,533 |
| Interest
|
4,108 | 4,447 |
| Total receipts and other credits | $21,558 | $21,575 |
| Payments and other charges | ||
| Retirement allowances
|
20,521 | 19,657 |
| Withdrawal allowances, including interest
|
344 | 3,101 |
| Pension division payments
|
0 | 243 |
| Refundable taxtable 10 note 1
|
182 | 37,080 |
| Total payments and other charges | $21,047 | $60,081 |
| Closing balance | $239,875 | $239,364 |
Table 10 Notes
Note: Due to rounding, the totals may not correspond with the sum of the component figures. |
||
Roles and responsibilities
President of the Treasury Board
The President of the Treasury Board is responsible for the overall management of the plan on behalf of the Government of Canada, the plan’s sponsor.
Treasury Board of Canada Secretariat
The Treasury Board of Canada Secretariat:
- develops policy recommendations for the funding, design and governance of the plan
- provides strategic direction, program advice and interpretation
- drafts required legislative authorities
- prepares annual report for tabling in Parliament
Public Services and Procurement Canada and the Senate of Canada
Public Services and Procurement Canada and the Senate of Canada are responsible for the day‑to‑day administration of the plan, including all communication with plan members. This includes developing and maintaining the plan’s pension systems, books of accounts, records, and internal controls, as well as preparing account transaction statements for reporting in the Public Accounts of Canada.
Chief Actuary of Canada
The Chief Actuary of Canada provides an annual actuarial valuation of the plan for accounting purposes and performs a funding valuation once every 3 years. The Chief Actuary also sets the parliamentarians’ contribution rates and coordination factors for the plan and assists the President of the Treasury Board in making informed decisions regarding the financing of the pension benefit obligation.
Glossary
- actuarial valuation
- An actuarial analysis that provides information on the financial condition of a pension plan.
- average annual pensionable earnings
- The best consecutive 5-year average of a member’s annual pensionable earnings to be used in the calculation of retirement allowances for service accrued on or after January 1, 2016. The average annual pensionable earnings may be drawn from any consecutive period in the member’s pensionable service history. Pensionable earnings for this purpose include the cumulative total of the sessional indemnity and any additional allowances or salary payable to a member in a calendar year.
- average annual sessional indemnity
- The best consecutive 5-year average of a member’s annual sessional indemnity to be used in the calculation of retirement allowances for service accrued before January 1, 2016. The average annual sessional indemnity may be drawn from any consecutive period in the member’s pensionable service history. Sessional indemnity for this purpose is the equivalent to a monthly salary and is payable in accordance with the Parliament of Canada Act.
- average maximum pensionable earnings (AMPE)
- The average of the year’s maximum pensionable earnings as set by the Canada Pension Plan and the Québec Pension Plan for the year of retirement and the 4 preceding years.
- benefit accrual rate
- The rate at which a plan member’s retirement benefits for the year are accumulated. It applies to retirement allowances and survivor benefits, but not to withdrawal allowances.
- Canada Pension Plan (CPP)
- A mandatory earnings-related pension plan to provide basic retirement income to Canadians who work in all the provinces and territories except Quebec, which has its own plan (see Québec Pension Plan) for persons who work in that province.
- child benefit
- An allowance payable to an eligible dependent child in the event of a plan member’s death. To be eligible, a child must be under 18 years of age. Children between 18 and 25 may receive allowances if they are enrolled in school or another educational institution full-time and have attended continuously since the age of 18 or the date of the plan member’s death, whichever occurs later.
- Consumer Price Index (CPI)
- A measure of price changes published by Statistics Canada on a monthly basis. The CPI measures the retail prices of a “shopping basket” of about 300 goods and services, including food, housing, transportation, clothing and recreation. Increases in the CPI are also referred to as cost‑of‑living increases.
- earnings limit (EL)
- The maximum earnings for which pension benefits can be earned during a calendar year under a registered pension plan, as defined by the Income Tax Act. The EL was $184,200 for calendar year 2023 and $179,700 for calendar year 2022. (Note: This was formerly referred to as “maximum pensionable earnings (MPE)”.)
- indexation
- The automatic adjustment of pensions to reflect changes in the cost of living, as determined by the Consumer Price Index.
- pension division
- The division, pursuant to the Pension Benefits Division Act, of a member’s accumulated pension benefits between the member and a spouse or partner in the event of the breakdown of a marriage or a common-law relationship.
- pensionable service
- Periods of service credited to a member of the Members of Parliament Pension Plan. This service includes any complete or partial periods of purchased service (for example, service buyback or elective service).
- Québec Pension Plan (QPP)
- A pension plan similar to the Canada Pension Plan that covers individuals working in the province of Quebec. It is administered by Retraite Québec.
- retirement allowance
- A benefit payable on a periodic basis to a pension plan member until their death, unless payment of the benefit is suspended.
- survivor benefit
- A benefit paid to a plan member’s eligible survivor. An eligible survivor is the person who was married to the member or was living in a common-law relationship with the member for at least one year before the member’s death or one year before they ceased to be a parliamentarian, whichever comes first.
- year’s maximum pensionable earnings (YMPE)
- The maximum earnings for which contributions can be made to the Canada Pension Plan and the Québec Pension Plan (earnings ceiling) during the year. The YMPE was $66,600 for calendar year 2023 and $64,900 for calendar year 2022.
© His Majesty the King in Right of Canada, represented by the President of the Treasury Board, 2024,
ISSN: 1487-1815
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