, . ! .. , ·'1 ,I: • " .1 I I i • I I' I I I I I I I I I I I I I I I .0. I I 0 I I .0. I I NOVA SCOTIA MLA PENSION REVIEW REPORT Report of Panel appointed by the Speaker of the Nova Scotia House of Assembly on May 5~ 2011 Chair: Hono~rable David W. Gruchy, Q.C. Members: John A. Morash, C.A. Ronald E. Smith, FCA November 3, 2011 1 November 3, 2011 Honourable Gordie Gosse, Jr. Speaker of the Nova Scotia House of Assembly Province House - 1726 Hollis Street Halifax, Nova Scotia Honourable Speaker Gosse, We have the honour to present herewith our report and recommendations regarding the allowances and benefits of retiring Members of the Nova Scotia House of Assembly. Over the past six months we have met with many people who graciously gave of their time, on our schedule, to share their expertise on this topic. We express our thanks to Steven R. Wolff and John Ross of the Nova Scotia Pension Agency, Gordon D. Hebb, Q.c., Chief legislative Counsel and Mel Bartlett, Partner, Morneau Shepell limited and the many people in his office who worked tirelessly on this project. We greatly appreciated the written submissions received from Nova Scotians and from former MlAs. Current and retired MlAs spoke with us candidly and privately of their experiences. This input helped guide us in our deliberations. We are of the view that MlAs have a unique and demanding job in today's Nova Scotia and as a result their retirement package must be reasonable, fair and transparent. From this optic we have concluded that some adjustments should be made to the current arrangement. The recommendations contained in this report are fair, reasonable and transparent. They are made following a thorough analysis of the data collected and presented by Morneau Shepell in their report to us. We believe that our recommendations are fair as they relate to current sitting MlAs, former MlAs and MlAs yet to be elected. Should the recommendations be implemented, we believe they will set a clear future course on the topic of the MlA retirement package for the women and men who will be elected for the first time at the next provincial general election as well as for those who will be re-elected. 2 Finally, we are most grateful for the administrative support received from the Clerk's Office in assisting us with our work. We especially thank Neil Ferguson, Chief Clerk and Annette M. Boucher, Q.c., Assistant Clerk, for their many hours dedicated to this project, hours over and above their regular work hours and a significant and complex project over and above their regular duties. We are pleased to present this report to you within the time frame set out in our Terms of Reference and are of the view that we have accomplished our mandate and the task assigned to us. We hope that our recommendations will be of assistance and we thank you for the honour it has been for us to serve our Province in this limited manner. Respectfully submitted, Honourable David W. Gruchy, Q.c. Ronald E. Smith, FCA 3 TABLE OF CONTENTS INTRODUCTION ............................................................................................................. Page 5 METHODOLOGY ............................................................................................................ Page 7 PROFILE OF A NOVA SCOTIA MEMBER OF THE HOUSE OF ASSEMBLy .............. .. Page 11 RETIRED MLAs - HOW ARE THEY DIFFERENT? .................................................... Page 16 THE CURRENT MLA RETIREMENT PACKAGE ....................................................... Page 20 RECOMMENDATIONS ............................................................................................. Page 25 IMPACT OF FOREGOING RECOMMENDATIONS ................................................. Page 34 SUMMARY OF RECOMMENDATIONS .................................................................. Page 36 APPENDICES Appendix A - Terms of Reference and Panel Member Biographies Appendix B - Report of Morneau Shepell to the Review Panel Appendix C - Press release announcing Pension Review Panel Appendix D - Press release inviting public input and letter to pension recipients inviting input to the Pension Review Panel Appendix E - Written submissions received by Review Panel E-l Fifty submissions received bye-mail E-2 Eleven submissions received by regular mail E-3 Three submissions received at private meetings Appendix F - List of Presenters to the Pension Review Panel Appendix G - Material from the Nova Scotia Pension Agency 4 INTRODUCTION [1] Pension income is important to Canadians. [2] Certain employers, including governments, provide a formal pension plan to their employees. In some cases, employees look for employers who offer pension plans when seeking employment in order to guarantee them a retirement income stream. Often, employees must supplement their employment pension plan with personal retirement savings. Today, there are also many employees who do not benefit from a work pension plan at all and who must save, if they are able to do so, for their retirement by Registered Retirement Savings Plans (RRSP) or some other type of savings plan in lieu of an employer pension plan. During an employee's working life that person will contribute to the Canada Pension Plan (CPP) and this fund becomes a source of pension income accessible as early as age sixty. Finally, most Canadians over the age of sixty-five receive Old Age Security (OAS) and, for those who qualify, an additional guaranteed income supplement (GIS). Depending on individual circumstances retirement income for Canadians comes from some combination of employment pension plan, CPP, individual RRSP savings, OAS and GIS. [3] In 2007, Chief Justice J. Derek Green in his report to the Newfoundland and labrador House of Assembly quoted Mercer Human Resources when referring to the interplay between employment pensions, government retirement income and individual savings: "The structure of pensions in Canada is supported by three pillars, namely: 1. government programs, 2. employer programs, and 3. individual savings. Only when all three pillars are present in the correct proportions will the structure hold up. There is no doubt that for most Canadians all three components are required if adequate retirement incomes are going to be available to all".l [4] This report reviews one employment pension plan - the Nova Scotia Members of the legislative Assembly (MlA) Pension Plan and the related retirement benefits available to a retiring MlA. [5] The Terms of Reference appointing this Review Panel require a review of the Nova Scotia MlA Pension Plan and retirement benefits and the making of any recommendations for appropriate changes in view of the basic premise that Members of the legislative Assembly should be entitled to retirement benefits at a fair and reasonable level to ensure that capable 1 Chief Justice 1. Derek Green: "Rebuilding Confidence: The Report of the Review Commission on Constituency Allowances and Related matters", Newfoundland and labrador, April 3D, 2007, page 11-1. 5 individuals continue to offer themselves for public service.2 The Terms of Reference do not include a review of MlA salaries or other remunerative allowances or benefits received by a Member while serving as an MlA. [6] This report canvasses the unique career circumstances of an elected MLA, which include the fact that the average MLA political career is approximately seven years; the unexpected elements of political life and the interruption of and re-integration into life as it existed before political service. The report is divided into several sections, presented as follows: methodology; profile of a Nova Scotia Member of the House of Assembly; how a retired MLA is different from other retirees; a description ofthe current MLA retirement package; our recommendations and the basis on which they were formulated and finally supporting material presented in the form of appendices. [7] The primary objective of the report is to recommend an MLA pension package that is fair and reasonable to the MLAs themselves, either retired, currently serving or yet to serve, all the while being understandable and transparent to the people of Nova Scotia. 2 Appointment and Terms of Reference, N.S. MlA Pension Review Panel, May, 2011, Appendix A. 6 METHODOLOGY [8] The Review Panel considered the following in arriving at its conclusions: • Report of the actuarial consulting firm Morneau Shepell: "Report to the Nova Scotia MlA Pension Review Panel". At our request, the report provides a financial analysis and comparison of projected pension benefits, in current dollar values, of a series of ten possible MlA profiles including cross-country comparison bench markers; • Submissions received from the members of the public, from interest groups, from current MlAs and from retired MlAs and from a family member of a deceased MLA; • Research and analysis of data collection, reports and recommendations regarding Member pension reform in other Canadian jurisdictions; • Nova Scotia reports of Commissions of Inquiry on Remuneration of Elected Provincial Officials since 1998. • Materials prepared by the Nova Scotia Pension Agency regarding MLA pensions. • Relevant legislative provisions in Nova Scotia. • Nova Scotia House of Assembly Members' Manual - Compensation, Expenses and Constituency Administration, May 2011. A. ACTUARY REPORT - MORNEAU SHEPELL [9] The Review Panel retained the services of Mel Bartlett, F.S.A., C.I.A., Partner, Morneau Shepell, to conduct the survey of data and give an assessment of the group benefits