New PSPP-based pension with top-up for long-serving MPPs takes effect January 2026
Ontario has passed legislation that will reintroduce a defined benefit pension plan for Members of Provincial Parliament (MPPs) beginning January 1, 2026, as reported by the Ontario government.
According to CityNews Toronto, MPPs will join the Public Service Pension Plan (PSPP) on the same terms as other members. Those with at least six years of service will receive a supplemental pension benefit.
The pension will be based on the member’s best consecutive three-year average salary with an accrual rate of three percent annually.
Eligibility for full pension begins at age 65.
Early retirement is allowed from age 55, with a reduced accrual rate of two percent per year and a 20 percent reduction in total benefit.
Participation is optional for MPPs aged 65 to 71, while those older than 71 will receive an allowance as per federal pension restrictions.
The plan replaces a retirement savings arrangement in which MPPs received contributions equal to 10 percent of their salary.
As per the Ontario government, this change comes three decades after the previous MPP pension plan was eliminated in the 1990s.
An example provided by officials shows that an MPP aged 49 with six years of service and base salary only would receive $33,425 annually if retiring at 65.
Early retirement would reduce that to $24,530. Those with less than six years of service would receive $17,070 or $8,353 respectively.
Costs associated with the new pension plan are projected at $2.4m annually for PSPP contributions and $4.4m for the supplemental benefit, starting in 2026.
These figures are expected to rise with future salary increases.
The pension changes accompany a salary adjustment that increases the MPP base salary from $116,550 to $157,350, effective the day of the 2025 Ontario election.
As reported by the Ontario government, annual increases will be indexed to changes in federal MPs’ compensation.
All parties in the Ontario legislature supported the legislation.
Finance Minister Peter Bethlenfalvy said the changes are “fair and reasonable,” and emphasized the alignment of MPP benefits with those in comparable public service roles.
