To explain the issue with how it was calculated in the article, MPs put 20% of their salary in their pension fund, what that means is that they can end up having put in it millions of dollars over a long enough career and if they had that money to administer by themselves then yes PP could end up bringing home 20k/month BUT the way it’s administered isn’t like in the private sector, they don’t have access to all the money they put in their pension fund, they instead get a guaranteed amount of money every year (that’s indexed every year) but there’s a limit to how generous their pension is. Both how much they get every year and the maximum they can start with is based on the salary they made during their 5 best years of employment.
The same is true for all federal employees by the way, you can make 50k/year for 30 years and then work 5 years making 100k/year, how much you get when you retire will be based on those last 5 years, no matter how much you “put in the pot” the years prior.
That system works so well that it’s the envy of people in the private sector and it’s generating surplus that the federal government wanted to appropriate to add to its coffers (basically taking the money their employees paid in pension and adding it to their budget, which is the same as retroactively increasing the income taxes that federal employees paid).
To explain the issue with how it was calculated in the article, MPs put 20% of their salary in their pension fund, what that means is that they can end up having put in it millions of dollars over a long enough career and if they had that money to administer by themselves then yes PP could end up bringing home 20k/month BUT the way it’s administered isn’t like in the private sector, they don’t have access to all the money they put in their pension fund, they instead get a guaranteed amount of money every year (that’s indexed every year) but there’s a limit to how generous their pension is. Both how much they get every year and the maximum they can start with is based on the salary they made during their 5 best years of employment.
The same is true for all federal employees by the way, you can make 50k/year for 30 years and then work 5 years making 100k/year, how much you get when you retire will be based on those last 5 years, no matter how much you “put in the pot” the years prior.
That system works so well that it’s the envy of people in the private sector and it’s generating surplus that the federal government wanted to appropriate to add to its coffers (basically taking the money their employees paid in pension and adding it to their budget, which is the same as retroactively increasing the income taxes that federal employees paid).