WHERE IS MY MONEY: FORMER MPs RETIREMENT AND PENSION BENEFITS Rosy Retirement and Recycling MPs Justified? The front page newspaper article in the Post Courier of 26th September 2014 provoked me to find out more about what really constitutes retirement and pension benefits for our former MPs. The following is not a subjective view regarding the former MPs complaint but generally on the issue of pension and retirement benefits which captured my interest. The Parliamentary Members’ Retirement Benefits Fund is established by section 9 of the Parliamentary Members Retirement Benefits Act 1997. The fund is comprised of the contributors’ contributions, income earned by the Fund and payments by the State. Each Member of Parliament is compelled by law to contribute at least 15% of his salary to the fund during his/her Parliamentary term. A Pensions & Retirement Benefits Committee was appointed at the beginning of this term of Parliament which is comprised of MPs Solan Mirisim, Joseph Lelang, James Gau, Charlie Benjamin and Julie Soso. For a former MP who is a citizen and completed one or more terms prior to the 1982 general election and has not contributed to the fund, he is entitled to a benefit in respect of non-contributory service. The benefit that a non-contributor MP receives is in the form of a pension for former Members. The rate of pension benefit in this case is 5% of the MP’s salary of each year until the MP dies. For MPs other than the Prime Minister who have contributed to the fund, their benefits consist of a contributor’s final benefit (which is =their contribution + State contribution + accumulated Interest) which can be taken as a pension. The rate at which the pension is paid is the rate of 5% of a Member’s salary for each year of completed service. That payment ceases upon his death. A former contributor who has served as Prime Minister for a period in excess of twelve months is entitled to a benefit in respect of contributory service. His final entitlements consist of his contribution + State contribution + accumulated Interest. The rate at which the pension or entitlement for former PMs is the rate of 5% of a Prime Minister’s salary for each year of completed service. The former PMs pension payment ceases upon his death. A retirement benefit established under the Act is the MP’s contribution and the State’s contribution. A former MP is entitled to claim that amount as a lump sum upon exiting Parliament. According to the Act, the State also contributes on an emerging cost basis to the benefits of the former MPs and PMs. The retirement benefit is similar to superannuation savings with NASFUND or Nambawan Super. The term “retirement” in the ordinary sense means that it is a point when a person ends his employment or carrier. The term is however not defined or qualified by the Act. A pension on the other hand is the State’s contribution which is converted into a pension. An ordinary MP who served as an MP receives 5% of a Member’s salary for each year of completed service. The amount they will receive depends on their length of service in Parliament and any positions they have held such as a ministerial post. The former MPs receive that amount fortnightly and are tax free. According to the Act, the State contributes about 140% of the contributor benefit for an ordinary Member’s salary for an equivalent period of service. A pension typically follows a retirement from service and is paid on a regular basis. According to the Act a former MP starts collecting his pension as soon as he leaves office. It follows therefore that if he is a young MP, he would be on pension as soon as he loses his seat. An ordinary MP serving one term of Parliament is understood to be currently receiving around K1000 per fortnight. Under section 30 of the Act, where a pensioner is re-elected to Parliament, his pension, other than the pension for non-contributory service ceases and he resumes contributions to the Fund. Considering the entire Act, a former MP or PM continues to be on pension until he is re-elected or dies. It is understood many countries in the commonwealth have pension arrangements for their former MPs. The rationale for pensions for former MPs is unclear and differs from country to country but from what I gather, may be because during the course of their service to Parliament, opportunities to earn alternate living in private were reduced or lost. In most cases, pensions are paid to a former MP who completes his life in Parliament and is retiring to live a private life. Is it then justified where an MP seizes every opportunity presented to him whilst being an MP to enrich himself at the expense of the majority? I think it defeats the rationale for a pension because his opportunities were enlarged than being reduced. Is it reasonable that a retirement benefit or pension is paid to a former MP only to keep him going until the next elections when it supposed to be for retirement purposes? At the end of the day, it’s the tax payers’ that keep the former MPs and PMs on pension. I dont find the real definitions of pension and retirement resonate in the Act or being practised. May be, its a PNG way of defining the two terms.
Posted on: Tue, 30 Sep 2014 07:29:43 +0000
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