Frequently asked questions: Members of Parliament Pension Plan
1. Who is covered by the Members of Parliament Pension Plan, and what are the key components of the plan?
The Members of Parliament Pension Plan is governed by the Members of Parliament Retiring Allowances Act. The plan encompasses both the Senate and the House of Commons.
Key components of the plan
- Contribution rates:
- Member contribution rates have gradually increased since . The rates reach a combined rate of 23.34% of pay as of .
- Retirement age:
- For pensionable service accrued prior to , a plan member with 6 years of service may receive their pension as early as age 55.
- For pensionable service accrued on or after , a plan member with 6 years of service may receive an unreduced pension at age 65.
- Coordinating the Members of Parliament Pension Plan with the Canada Pension Plan or the Quebec Pension Plan (CPP or QPP):
- For pensionable service accrued on or after , pension benefits are coordinated with the benefits paid under CPP or QPP. As a result, pension benefits for members of Parliament are adjusted at age 60 by a formulated amount to reflect the benefits paid under CPP or QPP.
2. How is a reduced pension payable prior to age 65 calculated?
For service accrued after , the pension is reduced by 1% for each year that the plan member retires before age 65. A reduced pension can be payable as early as age 55.
3. What do the different retirement ages mean for plan members who were vested (that is, who had more than 6 years of service) before , and for current plan members who have pensionable service before and after ?
Members who are at least 55 years of age and who had at least 6 years of accrued pensionable service before , are eligible to receive the following:
- an unreduced pension benefit for their pensionable service accrued before
Members who are between the ages of 55 and 65 and who have at least 6 years of accrued pensionable service may be eligible to:
- receive an unreduced pension benefit for their pensionable service accrued before , and
- elect for either a reduced pension benefit payable as early as age 55 or a deferred unreduced pension benefit payable at age 65 for their pensionable service accrued after
The following table shows the combination of benefits that could be chosen by a plan member who has 6 or more years of pensionable service. The benefit available depends on:
- when the pensionable service was accrued
- at what age the pension benefit is taken
If the pensionable service was accrued… The plan member’s pension benefit is… Before An immediate unreduced pension as early as age 55 Before and after
1 of the following 2 scenarios:
1) An immediate unreduced pension for service accrued before , that can be taken as early as age 55, and an immediate and permanently reduced pension for service accrued after , that can be taken as early as age 55
2) An immediate unreduced pension for service accrued before , that can be taken as early as age 55, and an immediate unreduced pension for service after , that can be taken as early as age 65
On or after An immediate unreduced pension than can be taken as early as age 65 or an immediate and permanently reduced pension that can be taken as early as age 55
4. How are the contribution rates set?
As of , the Chief Actuary of Canada was required to set member contribution rates. The member contribution rates have increased to bring the plan members’ share of current service cost to 50% as of January 2017.
Contribution rates are set every 3 years and published in the Canada Gazette. For additional information, refer to the most recent actuarial report, which contains the assumptions the Chief Actuary uses to determine the rates.
The 2021 contribution rates for members (prior to reaching the 75% maximum pension accrual) are as follows:
2021 member contribution rates Contribution rate up to the YMPEtable note 1 Over the YMPE, up to the MPEtable note 2 Over the MPEtable note 3 Combined
Source: Canada Gazette website
Table 2 Notes
- Table Note 1
The year’s maximum pensionable earnings (YMPE) are the maximum earnings for which contributions can be made to the Canada Pension Plan or the Quebec Pension Plan during the year. For 2021, the YMPE is $61,600.
- Table Note 2
The maximum pensionable earnings (MPE) are calculated based on the defined benefit limit established by the Income Tax Act, which represents the maximum pensionable earnings on which pension benefits can be accrued during a calendar year. For 2021, the MPE is $170,500.
- Table Note 3
Once a plan member reaches age 71, they contribute at the over the MPE rate only.
20.97% 24.69% 23.34% 23.34%
5. How are benefits coordinated with the Canada Pension Plan or the Quebec Pension Plan (CPP or QPP)?
Pension benefits for all pensionable service accrued on or after , are coordinated at age 60 with CPP or QPP, regardless of when the member starts to receive CPP or QPP benefits. This is consistent with other federal public sector pension plans.
6. What is the prime minister entitled to?
A prime minister who holds the Office of the Prime Minister for at least 4 years is entitled to receive a special retirement allowance in addition to their Members of Parliament pension benefit.
A prime minister may begin to receive an allowance at age 67 or upon ceasing to hold office, whichever is later.
The allowance is calculated using the following formula:
3% x [The number of years in which the member held the Office of the Prime Minister] x [The prime minister’s salary at the time the payment of the allowance begins]
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