Judging from the number of persons who contacted me to suggest that I write part two, it would appear as though my last column, Lucrative Pensions of MPs, has struck a chord with readers. Many people have asked me to go into more detail, but before I do, I must warn that the pedestals, on which politicians from both major parties have been placed, might become shaky.
If the manipulation of the pension laws became generally known, it would tend to portray our political leaders since Independence as elitist and self-serving. And it would also give the lie to the party propaganda of caring for the masses that they spout at election time. On March 1, 1969, a piece of legislation, entitled the Retiring Allowances (Legislative Service) Act, came into force. It was quickly followed on March 27 by the Pensions (Prime Minister) Act.
Those two acts have put in place a regime which ensures that former parliamentarians, who qualify for pensions, would be set for life. Ordinarily MPs qualify, at age 50 years, for a pension after a minimum of eight years’ service. The original legislation made them pensionable at age 55, but a 1989 amendment reduced the qualifying age to 50. I must point out that the eight-year minimum and the age restriction do not apply to the Prime Minister.
The holder of that office qualifies for a pension of two-thirds of his salary in less than an hour. Section 3 (1) of thePensions (Prime Minister) Act states, in part: “Every person who having been appointed Prime Minister on or after the 30th November 1966, ceases at anytime after such appointment to be Prime Minister shall be paid a pension under this act with effect from the date on which he ceases to be Prime Minister...”
Put simply, a person who demits office at any time after being appointed PM is immediately pensionable and becomes entitled to receive a pension of two-thirds of the highest annual rate of salary. At current rates, a former PM would be entitled to a pension of $11 287.53 per month. However, if he opts for a gratuity and a reduced pension, he would be entitled to receive a tax free gratuity of $423 282.50 and a reduced pension of $8 465.65 per month.
After the politicians effectively set themselves up for life in 1969, they went about systematically dismantling the pension entitlements of most other public servants. They started with the most vulnerable by amending the Casual Employees Pensions Act to prevent persons who became casual employees after July 1971 from receiving a pension.
Hereafter, they were required to rely on National Insurance or make private arrangements for any additional benefits that they may require. Also, the retirement age for casual employees was increased from 60 to 65 years, with a provision that existing employees could opt to retire at the later time on condition that service after the workers’ 60th birthday would not be taken into account in computing their pensions.
After dealing that knockout blow to casual employees, the next assault on the pension entitlements of public workers came in 1975. Government amended the various pensions acts so that workers entering public service employment after September 1, 1975 would continue to be pensionable but that their Government pensions would be reduced by the amount that they receive from NIS. In essence, the people at the bottom of the public sector pay scales would no longer get a pension from the Treasury.
And to strengthen my point about being elitist and self-serving, that reduction did not apply to MPs, judges and the Governor-General. The restoration of pensions has remained a matter on the agenda of public sector unions until today.