Thank you, Madam Speaker. Let me continue by asking how the government gets around its own laws in paying these extravagant benefits. It uses the retirement compensation arrangement. People watching this do not have a clue. They know that hopefully we pay a lot of money in, $600 a month, and we get a lot more money out. If that is attack, I do beg forgiveness again, but those are the numbers and that is the way it is.
The plan created by the Members of Parliament Retiring Allowances Act is what we pay into but it contravenes the Income Tax Act. How do we get to pay more into a pension plan than those who are contributing in the private sector? We do so by writing our own rules and using the retirement compensation arrangement or an RCA account.
As we see in section 4300 of the income tax regulations, RCAs were originally introduced in October 1986 to prevent taxpayers in the highest tax brackets and employees of non-taxable entities from deferring the payment of tax, which happens across the country. Contributions to an RCA are subject to a 50 per cent refundable tax under section 207.5(1), which also applies to any investment income plan; most retirement plans are invested. It is a very expensive way to fund a retirement plan for anybody but the government.
As a report produced for the National Citizens Coalition points out, the use of the RCA means the government is going through the motions to comply on paper with the provisions of its own law. In other words, this looks legitimate under the Income Tax Act because it is all right under the RCA.
Madam Speaker, when I was called opportunistic that hurt me and maybe that bordered on something unparliamentary. I would have loved it if you had jumped up in my defence because I am giving up a lot of cash. As somebody who is opting out I should mention the effect Bill C-85 and the RCA account will have on me because it is substantial.
I trust there will be some opting out from the government benches because the full class of '88 is in the same position I am; all of us on this side of the House with the exception of a few Bloc members who were here before sitting as Tories.
The portion of my contributions that went into the retirement compensation arrangement, the RCA, or 7 per cent of everything I have earned in the last six years I have transferred over. I now will have to pay tax on it. It is one thing to think that I am somebody who is opting out and will just scoop up that money. The government says I can get all the money back that I have contributed but with zero from the government. It would be wonderful to say: "I opt out of the rich stuff, please just give me my contributions plus matching contributions from yourself". That is all we are really asking. Make it fair. Make it in line with the private pension plans. I will only be able to get back my money at 4 per cent interest, which is the money I have put in.
It would be wonderful to roll that over into RRSPs, mutual funds or whatever, but I will have to pay tax on 4 per cent of my income which is in a separate fund. The portion the government puts into a legitimate registered pension plan has been sheltered from taxes.
I do not know if I am making myself clear enough. It has taken me ages to figure this out and so I do not expect somebody watching television to figure it out immediately.
The 11 per cent I am putting in is broken into 7 per cent and 4 per cent, with the 4 per cent sheltered from taxes. The 7 per cent we put into the other fund will be taxable. We will have to pay tax on that now while we are in a higher tax bracket rather than later when we are retired and living at a lower tax bracket. It means we will have to put more in.
If I had the option I would have taken the entire 11 per cent I have been putting in for six years and some months and gone to my financial adviser. I would have said: "Here is this much money per month; please put this into mutual funds and I will accrue the interest. You invest it wisely and I will be able to live
on it". I could have done that. I had the option. Maybe, but no. It was law that I had to this and put it into this plan.
Really I had no option. I wish I had because I would have taken that money, the whole 11 per cent I had been putting in, which is $600 a month, and I would have said: "Please do something with this. Put it into RRSPs; put it into mutual funds and I will collect the interest on that and I will look after my own retirement. This is my money, my salary, not public money. I will let regular sources of investment planning look after my retirement".