Fed Public Service Pensions - Under the Gun


View Poll Results: Fed - Prov - Muni Pensions to expensive -Compared to Private Sector Pensions
Yes 3 33.33%
No 4 44.44%
Not sure 2 22.22%
Multiple Choice Poll. Voters: 9. You may not vote on this poll

Goober
#1
Public Service Pensions - Under the Gun - This will also be followed by Provinces and Municipalities.

Pensions have become to expensive - We all knew it. We all know that changes had to come.

Canadian public pensions a fat target for Conservative government | Full Comment | National Post

The Harper government is said to be considering a restructuring of federal civil service pensions in the upcoming budget — reforms that could save taxpayers hundreds of millions of dollars a year.

Specifics are thin, and any reforms would face legal and legislative barriers. But sources say there are ways around these obstacles and there is a feeling in the senior ranks of the Conservative government that the time is right to target relatively lucrative public sector pensions, where the average pension amounts to $25,000 a year and the average age of retirement is 58, compared to 62 in the general labour force.

Ian Lee, assistant professor at Sprott Business School at Carelton University, advised Finance Minister Jim Flaherty at his strategic retreat last summer to raise the minimum pensionable age for public servants to 65 and move to equal employee/employer contribution rates (public servants currently contribute 35%, a rate that is set to rise to 40% next year. The norm in the private sector is for employers to match the retirement contributions of employees).

Other advocates of reform, such as William Tufts and Lee Fairbanks at the Fair Pensions for All organization, have called for the government to base pensions on an average of career earnings, rather than the current practice in the public sector of the highest three to five years’ income. Mr. Tufts and Mr. Fairbanks estimate the move to a career-average in the federal pension plan would save $290,000 over 30 years for year for each of the 317,088 active employees. They also calculated that a move to equal employee/employer contribution rates would have saved taxpayers $645-million in 2010.

Related
National Post editorial board: Paying pensions to a greying nation

Lorne Gunter: Civil service pensions too rich to sustain

Hugh MacIntyre: Increasing public pensions only works in a world of fantasy

The arguments for reform are convincing. The federal plan is $227-billion in deficit, according to a recent CD Howe report, or a mere $150-billion, if you believe the government’s numbers, thanks to the erosion of asset values during the recession.

In addition, there are around 9 million Canadians who work in small businesses who have no pension plans. “It is highly unjust they pay taxes to, inter alia, provide very generous pension plans to federal public servants,” said Mr. Lee.

The case for the defence from the unions is that public sector employees generally accept lower salaries than their private sector counterparts, in exchange for better retirement security. This line is undermined by a Canadian Union of Public Employees analysis last month that showed that average pay in the public sector is comparable to similar jobs in the private sector.

But Jack Mintz, director of the School of Public Policy at University of Calgary, pointed out that the unions have a strong case, if the government amends existing contracts unilaterally. “Certainly if the government changes the rules of the game in the middle of contracts, even if there are no legal barriers, it will raise some issues and could cost more in wage compensation down the road because it will be less attractive [to work in the public service] if the pension benefits are lower,” he said.

The solution in the private sector has been to phase out lucrative defined benefit pensions, which specify the payout retirees enjoy, in favour of defined contribution plans, which specify the amount employers must pitch in but not the final payout, for all new employees. Royal Bank of Canada was the latest large corporation to move to a defined contribution plan for new hires this month.

Tony Clement, the Treasury Board President, has been silent on the issue of pensions to the 561,000 members covered by the public sector pension plan but unions have been bracing for cuts to wages and benefits for the past two budgets. Mr. Clement’s predecessor, Stockwell Day, signalled the government’s intent when he said Canadians expect the public service to make “considerable sacrifices” in the fight against the deficit.

The most simple move would be to up employee contribution levels, which are governed by regulation and would not require a vote of Parliament. Moves to change the retirement age or move to a career average pensions would likely require new legislation.

Whatever Ottawa does to reduce the $2.8-billion it contributes toward the public service pension plan, it can expect to face concerted opposition from unions that have proven their tenacity on the issue by sustaining a court action to recover $30-billion in pension surplus they claim was illegally snatched by the Liberal government and used to pay down the national debt in 1999.

The government’s calculation is likely to be: is there any sympathy for the union’s position among the two-thirds of workers without a workplace pension? If handled skillfully — for example, by simultaneously raising the minimum age at which MPs can collect their pension — the answer will surely be no.
 
damngrumpy
+1
#2
They are on dangerous ground messing with public sector pensions or pensions in general.
My wife worked damned hard for the Federal Government for more than two decades and if
they decide to mess with that there will be a lot of people in the streets.
I am personally ticked off with governments. In addition, they institute unemployment insurance
and then they raid the fund because the overspent on everything else. They misspend on all
kinds of things provincially and then they raid the ICBC reserve funds to pay for their excesses.
In addition to stealing form pension funds and unemployment, they then blame the people they
are stealing from, to cover up their mistakes and blunders.
 
Goober
#3
Quote: Originally Posted by damngrumpyView Post

They are on dangerous ground messing with public sector pensions or pensions in general.
My wife worked damned hard for the Federal Government for more than two decades and if
they decide to mess with that there will be a lot of people in the streets.
I am personally ticked off with governments. In addition, they institute unemployment insurance
and then they raid the fund because the overspent on everything else. They misspend on all
kinds of things provincially and then they raid the ICBC reserve funds to pay for their excesses.
In addition to stealing form pension funds and unemployment, they then blame the people they
are stealing from, to cover up their mistakes and blunders.

The Military lost 30 Billion from their pension surplus.
 
damngrumpy
+1
#4
Money raided to build roads that should have been built decades ago while
everyone enjoyed cheap taxes. The funds that were paid for and secured
through matching funds as part of legal contracts should be protected by law.
Enough, governments have to either live within their means or raise the
royalties of the goods we sell to the world.
 
taxslave
+2
#5
It is well past time that gold plated government pensions were fixed. This includes politicians. Make them all defined contribution.
The next thing that needs to be addressed is the excessive amount of paid holidays many government workers get. When one person gets six weeks paid holiday us taxpayers not only have to pay that but also pay for a replacement. This is also a problem in some industries as well but many companies are fixing this problem in their contracts.
 
Goober
#6
Quote: Originally Posted by damngrumpyView Post

Money raided to build roads that should have been built decades ago while
everyone enjoyed cheap taxes. The funds that were paid for and secured
through matching funds as part of legal contracts should be protected by law.
Enough, governments have to either live within their means or raise the
royalties of the goods we sell to the world.

It all comes down to funding. People are living longer. If I recall the first Fed pensions started at age 70 - the average age for living was 71. Not hard to do the math.
They have more benefits, longer life, add it up.
 
TenPenny
+4
#7  Top Rated Post
Originally, people worked for the gov't, and knew that pay wasn't as good as in the private sector, but job security and pension benefits were better. It was a tradeoff. gradually, with public sector unions, we have evolved to the point where not only is job security good, pension benefits are good, they're indexed, but the pay is better than most other places.

The balance has shifted to the point where we, as taxpayers, cannot afford it. I personally do not believe we should have definied benefit pensions in the public sector. Make them defined contribution, or RRSPs with employer matching. We should not be on the hook for hte performance of pension plans.

As a society, we seem to think the gov't needs to guarantee us everything. Who is supposed to pay for this?
 
Goober
+2
#8
Quote: Originally Posted by TenPennyView Post

Originally, people worked for the govt, and knew that pay wasn't as good as in the private sector, but job security and pension benefits were better. It was a trade off. gradually, with public sector unions, we have evolved to the point where not only is job security good, pension benefits are good, they're indexed, but the pay is better than most other places.

The balance has shifted to the point where we, as taxpayers, cannot afford it. I personally do not believe we should have definied benefit pensions in the public sector. Make them defined contribution, or Rasps with employer matching. We should not be on the hook for hate performance of pension plans.

As a society, we seem to think the govt needs to guarantee us everything. Who is supposed to pay for this?

PS - That avatar is rather distracting. Or shall we say eye riveting.
From what I gather lower skill end jobs in the Public sector are about 20 % higher than the private sector. That along with better benefits, vacation, job protection, pensions all add up.

I think your analysis on how the Public / Private sector has changed is quite accurate.
 
Cannuck
#9
Quote: Originally Posted by GooberView Post

From what I gather lower skill end jobs in the Public sector are about 20 % higher than the private sector.

I'm obviously not at the lower skill level. Either that or I must be working in the wrong place. I made far more money in the private sector and took my current job despite the salary, not because of it.
 
Dixie Cup
+1
#10
[QUOTE=Goober;1529539]Public Service Pensions - Under the Gun - This will also be followed by Provinces and Municipalities.

But Jack Mintz, director of the School of Public Policy at University of Calgary, pointed out that the unions have a strong case, if the government amends existing contracts unilaterally. “Certainly if the government changes the rules of the game in the middle of contracts, even if there are no legal barriers, it will raise some issues and could cost more in wage compensation down the road

because it will be less attractive [to work in the public service] if the pension benefits are lower,” he said.

This is a silly assumption to make - just because it's government? Seriously???

How is it that private businesses manage to keep their employees with most not offering a pension plan at all? I work for a small business and consider myself fortunate because he matches RRSP contributions. He's the ONLY employer that I've worked for that offered the option. My husband doesn't have anything with his company so he contributes on a monthly basis to his RRSP as I did before my current position.

Seriously, this guy really figures no one will work for the government if pensions are cut back or, at the very least, made equal to what everyone else is paying? Really??? Huh!

Shaking my head!!

JMO
 
Cannuck
+1
#11
Quote: Originally Posted by Dixie CupView Post

How is it that private businesses manage to keep their employees with most not offering a pension plan at all? I work for a small business and consider myself fortunate because he matches RRSP contributions. He's the ONLY employer that I've worked for that offered the option. My husband doesn't have anything with his company so he contributes on a monthly basis to his RRSP as I did before my current position.

The fundamental difference between the public and private sectors is is the concept of goal setting. Once you strip away all the bull****, the main goal of private enterprises is to make money. If the company is not profitable, it will die. There is no real goal focus in the public sector. There are vague generalities like "we are here to serve the public" but every government has a different idea as to what constitutes service to the public. That is why the public sector seems seems to wander aimlessly at times if there isn't clear, precise direction. People like myself that are goal focused find it terribly frustrating. As soon as my kids have graduated, I will return to the private sector (which will require a move and is why I will wait until school is done). Working in the public and private sectors are not the same at all.
 
taxslave
#12
Quote: Originally Posted by CannuckView Post

The fundamental difference between the public and private sectors is is the concept of goal setting. Once you strip away all the bull****, the main goal of private enterprises is to make money. If the company is not profitable, it will die. There is no real goal focus in the public sector. There are vague generalities like "we are here to serve the public" but every government has a different idea as to what constitutes service to the public. That is why the public sector seems seems to wander aimlessly at times if there isn't clear, precise direction. People like myself that are goal focused find it terribly frustrating. As soon as my kids have graduated, I will return to the private sector (which will require a move and is why I will wait until school is done). Working in the public and private sectors are not the same at all.

I understand. I worked for DND for a while. Thought it would be a good retirement job. All I could take was 16 months. Turns out I am not ready to turn off my brain at the gate and retire yet. The security was not worth the frustration.
 
petros
+1
#13
LMFAO.....go work for the Feds and see what it's really like. Worst job I've ever had.
 
darkbeaver
#14
I left the public service when I was twenty two. The second engineer I worked with repaired hydraulic hose with electrical tape.
 
Cannuck
#15
Quote: Originally Posted by taxslaveView Post

I understand. I worked for DND for a while. Thought it would be a good retirement job. All I could take was 16 months. Turns out I am not ready to turn off my brain at the gate and retire yet. The security was not worth the frustration.

I'm fortunate in that I generally work by myself. That's slowly changing though so I hope I can hold out for 3 1/2 years.
 
Goober
+1
#16
Pricier pensions wouldn't reduce the lure of civil service | Full Comment | National Post

Let’s say that Stephen Harper, as reported by John Ivison, is considering a plan to restructure the public service pension plan, raising the minimum pensionable age to 65 and increasing the share employees have to contribute. Would this make it harder to recruit civil servants?

I would say (how should I put it?…), not a chance. Because:

1. Even if civil service pensions become slightly less attractive than they are now, they’d still be better than 90% of the population can claim. Relatively few private sector employers still offer a defined benefit plan, in which employees know how much they’ll make after retirement. Most are stuck with no pension at all, or a defined contribution plan, in which you kick in your share of the contributions and hope someone invests them wisely on your behalf. Even a second-rate plan in which the returns are certain is better than waiting until you’re 65 and praying there will be enough to retire on.

2. The pay gap that used to separate civil service jobs from private sector jobs has largely eroded. When public employees made significantly less than colleagues at private firms, you could argue that better pensions helped offset the difference. But most public employees are well paid and have better pensions and more security than anyone who doesn’t work for the government. Look around Ottawa: How many bureaucrats do you see driving Ladas and living in hovels?

3. The average bureaucrat retires four years earlier than the national average. The federal government has lately been considering an increase in the age at which Canadians get benefits from support programs like the Old Age Security and the Guaranteed Income Supplement programs, from 65 to 67. And many Canadians are working longer than ever due to the lack of retirement plans and the need to finance lengthier retirements that result from longer life spans. Civil servants leaving the bosom of Mother Government will find themselves thrown into a world where they are expected to pull their own weight well into their 60s. No more mornings at the golf course on early retirement.

4. People like security, and governments tend to be recession-free zones. It will always be harder to fire a public employee than some guy getting paid by the hour at a brickyard. That certainty is worth a lot: A moderate adjustment in pension benefits and costs won’t look like a bad deal when the next recession hits and bureaucrats know they can still expect a steady paycheque and a warm desk to go to.

5. In the civil service you can spend your day surfing porn on the internet and still keep your job, as long as your really sorry and promise to stop.

In sum: life in the civil service is so fat it could slim down considerably and still have it better than the majority of the population. There’ll be no shortage of applicants, believe me.
 
L Gilbert
+1
#17
Um, no kidding. Also, what bugs me is stuff like this:
"Winnipeg MP Jim Maloway, who was elected in the 2008 fall election, but lost his seat. After serving just two and a half years, Mr. Maloway won’t qualify for a federal MP pension, but he will receive about $78,886 as a severance package.
Consider the case of Bloc Leader Gilles Duceppe who is due for an annual pension of about $140,000 per year. The Canadian Taxpayers Federation estimates that if he lives until he’s 80 years of age, Taxpayers will have given him $2.9 million in pension benefits.
For every $1 MPs put into their pension plan, taxpayers contribute about $4 towards it."
Last edited by L Gilbert; Jan 6th, 2012 at 03:32 PM..
 
Cannuck
#18
Quote: Originally Posted by GooberView Post

In sum: life in the civil service is so fat it could slim down considerably and still have it better than the majority of the population. There’ll be no shortage of applicants, believe me.

That may be the case in some places but we can't get anybody to apply here and it's been stated on other threads, the RCMP have a terrible time attracting people. Blanket statements about public servants are simply wrong. Ottawa may be different but they are, for the most part, senior government managers. Personally, I wouldn't want to be a manager in the federal civil service for any amount of money.
 
Goober
#19
Quote: Originally Posted by CannuckView Post

That may be the case in some places but we can't get anybody to apply here and it's been stated on other threads, the RCMP have a terrible time attracting people. Blanket statements about public servants are simply wrong. Ottawa may be different but they are, for the most part, senior government managers. Personally, I wouldn't want to be a manager in the federal civil service for any amount of money.

Pension contributions will increase presently it is employee 35 - Feds 65 - ages of retirement for full pension will as well. Same with other Fed Pensions .
 
captain morgan
+1
#20
Quote: Originally Posted by GooberView Post

Pension contributions will increase presently it is employee 35 - Feds 65 - ages of retirement for full pension will as well. Same with other Fed Pensions .


The next logical step will be to institute a policy of Defined Contribution to the public service sector. That in itself will carve 100's of millions off the books annually.
 
Goober
#21
Quote: Originally Posted by captain morganView Post

The next logical step will be to institute a policy of Defined Contribution to the public service sector. That in itself will carve 100's of millions off the books annually.

No, I disagree. The next step would to base it upon total earnings. Not the last / best 5 years or so as is presently done.
 
taxslave
#22
Quote: Originally Posted by GooberView Post

No, I disagree. The next step would to base it upon total earnings. Not the last / best 5 years or so as is presently done.

I don't think that works with defined contribution plans.
 
Goober
#23
Quote: Originally Posted by taxslaveView Post

I don't think that works with defined contribution plans.

The Fed Pub Serv has that as part of their plan - and it is a defined benefit - same as my Military Pension. Based up the best 6 years,averaged out, then years of service etc. They can easily change it to last 15 years - mean average, years of service.
 
captain morgan
#24
Quote: Originally Posted by GooberView Post

No, I disagree. The next step would to base it upon total earnings. Not the last / best 5 years or so as is presently done.

To my understanding, a Defined Contribution Plan measures the total monies kicked-in (employer+employee) over the life of the individual's employment. That said, my belief is that there is no recognition of specific years in terms of highest or lowest income earning years.
 
CDNBear
+1
#25
Quote: Originally Posted by CannuckView Post

I'm obviously not at the lower skill level.

It's isn't obvious at all. Not that being a garbageman like yourself, requires much of a skill level.

Quote:

I made far more money in the private sector and took my current job despite the salary, not because of it.

I'm sure the perks, benefits, and rights you have as a union leech, that most Canadians do not enjoy, make up for that.

Quote: Originally Posted by CannuckView Post

There is no real goal focus in the public sector.

That is why the public sector seems seems to wander aimlessly at times if there isn't clear, precise direction.

You made that perfectly clear here...

Quote: Originally Posted by CannuckView Post

To put it into perspective, assume I wish to go to Vancouver and I head out to the highway and turn east. One could say I was driving in the "wrong" direction. This would be true although driving east is not inherently "wrong". It's just wrong given that I wish to go to Vancouver. I could change my goal to Winnipeg and my actions would then be "right". The concept of right and wrong do not exist for me in the absence of a goal. In religion, that goal is doing what God wants or going to heaven. Since i don't think God cares what I do, I make my own goals.

Nothing says wandering aimlessly, like heading to Vancouver, by way of Winnipeg.

Quote:

People like myself that are goal focused find it terribly frustrating.

Really? You seem quite at home changing your goals depending on your mistakes.

Kind of like...

Pee Wees Big Adventure - Bike Flip - YouTube



Quote: Originally Posted by CannuckView Post

Blanket statements about public servants are simply wrong.

Except for police, and not that they're public servants, but First Nations too.

Quote: Originally Posted by CannuckView Post

I can't say that because I don't know the bulk of cops on the job. All I can really go by is the pay and recruiting standards of police dept nowadays. Well, that and the experience of myself and others.

Your logic has the same consistency as your jello like principles.
Last edited by CDNBear; Jan 7th, 2012 at 08:10 AM..
 
Goober
#26
Quote: Originally Posted by captain morganView Post

To my understanding, a Defined Contribution Plan measures the total monies kicked-in (employer+employee) over the life of the individual's employment. That said, my belief is that there is no recognition of specific years in terms of highest or lowest income earning years.

The Pub Serv pension has what I described as what is used to set the amount of pension earned. Best 3 to 5 years is what the Pub service uses - or something very close. That is a major difference between what you believe, as many do and what the Pub Serv pensions are.
The Military uses best 5 years or so - averaged out to arrive at avg income for 1 year, multiplied at 2 % per years served, to arrive at your monthly pension.
 
taxslave
+1
#27
Quote: Originally Posted by GooberView Post

The Pub Serv pension has what I described as what is used to set the amount of pension earned. Best 3 to 5 years is what the Pub service uses - or something very close. That is a major difference between what you believe, as many do and what the Pub Serv pensions are.
The Military uses best 5 years or so - averaged out to arrive at avg income for 1 year, multiplied at 2 % per years served, to arrive at your monthly pension.

REgardless of what convoluted formula they use it is still a defined benefit plan, which pays out with no consideration as to how much money is in the fund. Leaving the poor taxpayer on the hook for all the excess. Now if their excessive pensions bankrupted the plan and current members were on the hook for it I would not care.
 

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