Amid controversy over the cost of its two defined benefit plans for members of city council, a Calgary city councillor has voluntarily decided not to participate in them.
“After consulting with my partner and family, I have declined the pension and transition allowance offered to me as a city councillor,” Coun. Jeromy Farkas wrote on his Facebook page last week. “If I serve two terms, the cost of this decision (benefit to taxpayers) is more than $500,000.”
The move follows months of advocacy efforts by the Canadian Taxpayers Federation over the costs of the two pension plans.
“Most people don’t have workplace pensions, so it’s rich for council members to have such a generous plan,” said Colin Craig, interim Alberta director of the Canadian Taxpayers Federation, in a statement.
Currently, city councillors in Calgary are members of two pension arrangements, a main defined benefit plan and a supplementary one.
Read: CTF calls on government to convert to DC
The plans each provide a pension benefit equal to two per cent of the councillor’s best average earnings over 36 months. Also of note is the fact that the plans provide an option for a joint life pension that pays a survivor pension to a partner of up to 100 per cent. If death occurs before retirement, a surviving partner or beneficiary receives the commuted value of the pension.
For the main pension plan, the city contributes 18.6 per cent of a councillor’s bi-weekly pay with the member putting in nine per cent. The city covers the full cost of the supplementary plan.
Farkas is also giving up some of the benefits that council members receive when leaving their post, either through resignation, defeat, retirement or opting not to run again. Those benefits include a transition allowance and extended health, dental benefits and life insurance.
As part of its advocacy efforts around council pension benefits, the taxpayers group has noted the main plan cost the city about $5.8 million from 2007-16. Council members, in turn, contributed about $1.2 million. The federation has said the same contribution information for the supplementary plan doesn’t appear to be public. As a result of the cost breakdown, it’s suggesting it’s time for the city to switch to a defined contribution plan for council members.
Craig noted the council would lose “the moral authority to address the bigger problem — the golden civil service pension plans,” if it didn’t change its own pension situation. The civil service plan, the federation states, saw taxpayer contributions increase by 181 per cent between 2007 and 2016.
“The CTF would like to see council members, and city employees, transferred into a less costly, dollar-for-dollar, defined contribution pension plan,” the federation stated, adding that Edmonton’s city council is no longer in a defined benefit plan.
Read: Ousted politicians in line for golden pensions
The organization is lauding Farkas’ decision. “Coun. Farkas has demonstrated an immense amount of principle by refusing to accept council’s golden pension and transition payments,” said Craig.
As a young man with no family to provide for and with many working years ahead of him, his situation is different from his colleagues, Farkas told the CBC. “My intent is not to needle any of the other councillors. It’s just to highlight how these pension funds are problematic in situations like mine.”