Future of Government Pensions (PS, CF & RCMP) & CF pension "double-dip"

[Infanteer]

...Or go more towards a self-directed RRSP while they serve as MPs, co-funded by the Crown.  When they retire (or are defeated) they keep the RRSP fund and then are given a (generous) gratuity, based on years of service completed in Parliament.

This method would allow Canada to rightly renumerate MPs for a difficult job, but once they are out of Parliament, the cost to Crown ceases also.

As usual, I like your ideas best.

 

[PMedMoe]

A report from a prominent think tank says Canada's parliamentarians are facing even graver pension woes than the rest of the country.

The C.D. Howe Institute says the pension plan that secures retirement benefits for members of Parliament and senators is underfunded by up to $1 billion.

The report says the plan provides MPs with more than 50 per cent of their six-figure salary, but has no assets set aside to pay for those future benefits.

Awww, I really feel sorry for them.  :

 

[MJP]

Awww, I really feel sorry for them.  :

I feel sorry for us the taxpayer...we have to make up that unfunded liability.

 

[PMedMoe]

I feel sorry for us the taxpayer...we have to make up that unfunded liability.

Yes, that too. 

 

[a_majoor]

Pension reform is quite doable, and effective in saving taxpayer dollars as well. While this case study is from Wisconsin, (there is no comperable Canadian example, yet), we should all be aware that there is a $500 billion unfunded liability of government pensiona and benefits over and above the $500 billion + debt, so some changes are needed ASAP:

http://www.city-journal.org/2012/22_1_scott-walker.html

It’s Working in Walker’s Wisconsin
The governor’s controversial labor reforms are already saving taxpayers millions.

Public unions around the country have poured money into an effort to vote Walker out of office.
One morning last February, Wisconsin governor Scott Walker called his staff into his office. “Guys,” he warned, “it’s going to be a tough week.” Walker had recently sent a letter to state employees proposing steps—ranging from restricting collective bargaining to requiring workers to start contributing to their own pension accounts—to eliminate the state’s $3.6 billion deficit. That day in February was when Walker would announce his plan publicly.

It turned out to be a tough year. The state immediately erupted into a national spectacle, with tens of thousands of citizens, led by Wisconsin’s public-employee unions, seizing control of the capitol for weeks to protest the reforms. By early March, the crowds grew as big as 100,000, police estimated. Protesters set up encampments in the statehouse, openly drinking and engaging in drug use beneath the marble dome. Democratic state senators fled Wisconsin to prevent a vote on Walker’s plan. Eventually, the Senate did manage to pass the reforms, which survived a legal challenge and became law in July.

The unions aren’t done yet: they’re now trying to recall Walker from office. To do so, they will try to convince Wisconsin voters that Walker’s reforms have rendered the state ungovernable. But the evidence, so far, contradicts that claim—and Wisconsinites seem to realize it.

Back in 1959, Wisconsin became the first state to let public employees unionize. The unions spent the next half-century productively, generating lavish benefits for their members. By the time Walker took office in 2011, the overwhelming majority of state and local government workers paid nothing toward the annual contributions to their pension accounts, which equaled roughly 10 percent of their salaries per year. The average employee also used just 6.2 percent of his salary on his health-insurance premium. Among Walker’s reforms, therefore, was requiring employees to start paying 5.8 percent of their salaries, on average, toward their pensions and to double their health-insurance payments to 12.4 percent of their salaries. These two changes, Walker estimated, would save local governments $724 million annually, letting him cut state aid to localities and reduce Wisconsin’s $3.6 billion biennial deficit.

These measures angered unions, but Walker’s other moves were even more controversial. One was to allow government employees to bargain collectively only when negotiating wages; in other areas, collective bargaining would no longer be part of the contract-making process. The unions screamed bloody murder, decrying the loss of what they called their “right” to collective bargaining. “We are prepared to implement the financial concessions proposed to help bring our state’s budget into balance, but we will not be denied our God-given right to join a real union,” said Marty Beil, head of the Wisconsin State Employees Union, back in February. “We will not—I repeat we will not—be denied our rights to collectively bargain.”

What had the unions most up in arms, however, was a reform that ended mandatory dues for members. Wisconsin unions were collecting up to $1,100 per member per year in these obligatory payments, which they then spent on getting sympathetic politicians elected. In the last two elections, for instance, the state’s largest teachers’ union spent $3.6 million supporting candidates. Walker’s reform meant that government workers could now opt out of paying these dues—savings that could help offset those workers’ newly increased health and pension payments, the governor said. The unions knew that, given the option, many of their members would indeed choose not to write a check—and that this would strangle union election spending.

The unions’ battle against Walker’s reforms has rested on the argument that the changes would damage public services beyond repair. The truth, however, is that the reforms not only are saving money already; they’re doing so with little disruption to services. In early August, noticing the trend, the Milwaukee Journal-Sentinel reported that Milwaukee would save more in health-care and pension costs than it would lose in state aid, leaving the city $11 million ahead in 2012—despite Mayor Tom Barrett’s prediction in March that Walker’s budget “makes our structural deficit explode.”

The collective-bargaining component of Walker’s plan has yielded especially large financial dividends for school districts. Before the reform, many districts’ annual union contracts required them to buy health insurance from WEA Trust, a nonprofit affiliated with the state’s largest teachers’ union. Once the reform limited collective bargaining to wage negotiations, districts could eliminate that requirement from their contracts and start bidding for health care on the open market. When the Appleton School District put its health-insurance contract up for bid, for instance, WEA Trust suddenly lowered its rates and promised to match any competitor’s price. Appleton will save $3 million during the current school year.

Appleton isn’t alone. According to a report by the MacIver Institute, as of September 1, “at least 25 school districts in the Badger State had reported switching health care providers/plans or opening insurance bidding to outside companies.” The institute calculates that these steps will save the districts $211.45 per student. If the state’s other 250 districts currently served by WEA Trust follow suit, the savings statewide could reach hundreds of millions of dollars.

At the outset of the public-union standoff, educators had made dire predictions that Walker’s reforms would force schools to fire teachers. In February, to take one example, Madison School District Superintendent Dan Nerad predicted that 289 teachers in his district would be laid off. Walker insisted that his reforms were actually a job-retention program: by accepting small concessions in health and pension benefits, he argued, school districts would be able to spare hundreds of teachers’ jobs. The argument proved sound. So far, Nerad’s district has laid off no teachers at all, a pattern that has held in many of the state’s other large school districts. No teachers were laid off in Beloit and LaCrosse; Eau Claire saw a reduction of two teachers, while Racine and Wausau each laid off one. The Wauwatosa School District, which faced a $6.5 million shortfall, anticipated slashing 100 jobs—yet the new pension and health contributions saved them all.

The benefits to school districts aren’t just fiscal, moreover. Thanks to Walker’s collective-bargaining reforms, the Brown Deer school district in suburban Milwaukee can implement a performance-pay system for its best teachers—a step that could improve educational outcomes.

Over the summer, a sign surfaced that the public wasn’t as alarmed by the Walker agenda as the unions would have liked. In August, six Republican state senators who had supported the reforms were forced to defend their seats in recall elections. Democrats, in the minority by a 19–14 margin, needed to pick up three seats to take back the Senate. In the days before the election, Wisconsin Democratic Party chairman Mike Tate touted poll numbers showing Democrats leading in three races and in a dead heat in the rest. “Independents are moving towards the Democratic candidates in strong numbers,” he told a group of national reporters. Every race, he claimed, was “eminently winnable.”

The manner in which the public unions ran the campaigns was telling. Because they realized that public-sector collective bargaining wasn’t the wedge issue that they’d expected, not a single union-backed ad mentioned it— even though it was the reason that the unions had mobilized for the recall elections in the first place. Instead, the union ads cried that Scott Walker had “cut $800 million from the state’s schools.” This was true, but the ads neglected to mention that the governor’s increased health-care and pension-contribution requirements made up for those funds, just as Walker had planned. That the unions poured nearly $20 million into the races, by the way, validated another argument of Walker’s: that mandatory dues are a conduit through which taxpayer money gets transferred to public-sector unions, which use it to elect Democrats, who then negotiate favorable contracts with the unions. In this case, the newly strapped Wisconsin unions had to rely heavily on contributions from unions in other states.

In the end, Republicans held four of the six seats and retained control of the Senate. Democrats nevertheless bragged about defeating two incumbents, but that achievement was more modest than it appeared. One of the Republican incumbents was in a district that Barack Obama had won by 18 points in 2008. The other losing Republican had been plagued by personal problems relating to his 25-year-old mistress. Meanwhile, two of the challenged Republicans, Alberta Darling and Sheila Harsdorf, won more decisively than they had in 2008, suggesting that the reforms might be strengthening some Republican incumbents. (The other two senators who kept their seats, Luther Olsen and Rob Cowles, ran unopposed three years ago, so it’s harder to tell whether their popularity has grown.)

The unions’ cause has been hurt by some widely reported stories of public-sector mischief. The most outrageous was the saga of Warren Eschenbach, an 86-year-old former school crossing guard from Wausau. After he retired, Eschenbach, who lives two doors down from Riverview Elementary, kept helping kids cross the road every morning; it gave him a reason to get up each day, he told a local TV station. But the Wausau teachers’ union didn’t see it that way: it filed a grievance with the city to stop him, since he was no longer a unionized employee.

Such stories of union malfeasance may not be enough to save Walker. If the governor’s opponents succeed in mounting a recall election, it would take place at some point between April and June. A poll conducted in October for the Wisconsin Policy Research Institute, where I work, found that Walker had a fairly low personal approval rating of 42 percent. Further, the public opposed recalling the governor from office by a troublingly slim 49 percent to 47 percent margin.

But if Walker’s task is to convince the public that the state hasn’t devolved into unfunded anarchy, he may have an easier case to make than you’d think. According to the same poll, 71 percent of Wisconsinites believe that the state’s public schools have either stayed the same or improved over the previous half-year. More than three-quarters of Wisconsinites expect the state’s economy either to get better or to stay the same in the next year, up from 60 percent during the height of the union tumult in March. And while just 23 percent of Wisconsinites think that “things in the country are generally going in the right direction,” 38 percent of them believe that that’s the case in Wisconsin, up from 27 percent in November 2010.

At his inauguration in 1959—and shortly before he created public-sector collective bargaining—Wisconsin’s newly elected Democratic governor, Gaylord Nelson, quoted Abraham Lincoln: “The dogmas of the quiet past are inadequate to the stormy present. . . . We must think anew and act anew.” It’s a good thing Scott Walker took his advice. It’s imperative for Wisconsin’s fiscal future that voters take it, too.

Christian Schneider is a senior fellow at the Wisconsin Policy Research Institute.

 

[McG]

I don't think there is anything terribly wrong with the pensions that currently exist for the CF, RCMP and PS.  Judges seem to become entitled to a pension very quickly, but to become a judge one must already have served most of a career as a lawyer so this does not seem too unreasonable.

If I were to reform federal pensions, I would introduce a single system that is able to account for differences between different types of employment of service.  With one system, I would hope to make movement between different parts of the federal government easier.  One system would be easier and cheaper to administer (though, that would only come with time as the "old systems" would continue to exist for the next 80 years as people currently entitled continue to live).  Full-time public servants should also see their pensions benefit from any part-time reserve service in which they participate.

I don't believe in double-dipping.  No other employer will pay someone both a pension and a paycheck because the individual changed departments under the same employer.  Double dipping would disappear under a unified pension system, but it would be replaced with the potential for a higher annuity as an incentive for retiring service members (CF or RCMP) to stay with the federal government.

Attached is one big-hand, small-map concept for such a system.

 

[mariomike]

I don't believe in double-dipping.  No other employer will pay someone both a pension and a paycheck because the individual changed departments under the same employer.  Double dipping would disappear under a unified pension system, but it would be replaced with the potential for a higher annuity as an incentive for retiring service members (CF or RCMP) to stay with the federal government.

More on that,
Topic: "Ottawa targets public service pension plan for cutbacks - Should the CF pension "double-dip" be next":
http://forums.army.ca/forums/threads/91361.0.html
6 pages.

Topic: ' "Double Dippers" Mega Thread':
http://forums.army.ca/forums/threads/87805.0.html

 

[McG]

... some foot note changes already:

 

[larry Strong]

If the Goeverment is serious about MP pension reform, it will go along ways to shutting up the cacophonous shreik that is riseing over the OAS. It will be intersting to see where the most resistance comes from......

Shared with the usual caveats:

Tory government urges MP pension reform

http://www.sunnewsnetwork.ca/sunnews/politics/archives/2012/01/20120130-145249.html

OTTAWA - The Conservatives are pushing fellow MPs to reconsider their platinum-plated pension plan.
Conservative house leader Peter Van Loan urged the MPs sitting on the Board of Internal Economy - a secretive all-party committee with exclusive authority over MP expenses - to look into scaling back the plan that sees taxpayers chip in $23 for every $1 an MP contributes.

"We don't think it's right we should be asking all of government and all Canadians to expect that we make savings across the board unless we're prepared to do it ourselves," he said.

"We're looking for real action out of the Board of Internal Economy."

Four Tory MPs - including Van Loan - two NDP MPs and one Liberal MP sit on the board.

Pension reform is top of the agenda for Parliament as MPs returned from Christmas break Monday.

Last week, Prime Minister Stephen Harper outlined in a speech in Davos, Switzerland, that his government was planning reforms to Canada's pension programs - likely the Old Age Security program - in a bid to curb future costs.

His announcement also came on the heels of a bombshell report by the Canadian Taxpayers Federation (CTF) that spotlighted how rich MP pensions actually are.

According to the report, in 2009-10, Canadians contributed $102.7 million to the MP pension plan.

On Monday, NDP MP Peter Julian responded to Van Loan's statements, arguing his party is proposing an independent panel be put in charge of MP pension reforms, not the MPs themselves.

"We've had no response from the government so far," Julian said of the New Democrat proposal.

Saying their pension plan was "very generous, it's clear," he added the NDP was there to fight for "fair and good" pensions for seniors across Canada.

 

[The Bread Guy]

If the Government is serious about MP pension reform, it will go along ways to shutting up the cacophonous shreik that is rising over the OAS.

The shriek will be even louder (and rightly so) if there isn't movement on MP pension reform.

 

[larry Strong]

The shriek will be even louder (and rightly so) if there isn't movement on MP pension reform.

The MP plan definitely needs a big dose of reality.........

 

[a_majoor]

The MP plan definitely needs a big dose of reality.........

This guy does:

 

[Jed]

This guy does:

Wow! That cracks me up.  :nod:

 

[GAP]

Again, dated but relevant.................

The Chopping Block: 4. Save billions via pension reform
Special to Financial Post  Oct 6, 2011
Article Link

By William Tufts and Lee Fairbanks

Public-sector unions have negotiated pensions that lift their retired members far above the poverty line. Their plans have been heavily funded by Canadian taxpayers and provide a seamless level of income support for public-sector employees, spanning their careers and continuing into their retirement until death.

In fact, many retirees on public-sector plans have a higher disposable income in retirement than they had on average during their working years. It is unfair for taxpayers to be on the hook for these liabilities.

There has been a serious lack of discussion in Canada about public-sector pension reform, but other governments have begun to address the issue. We suggest three ways to control the cost of public-sector employee benefits and at the same time make them fair for federal employees.

Equitable pension contributions between taxpayers and employees

Private-sector employers commonly match the retirement contributions of employees in Group RRSP savings plans. The federal government offers a very generous program whereby employees are required to fund only 35% of the cost of their retirement.

The C.D. Howe Institute estimates the federal public-sector pension plan to be underfunded by $200-billion. In 2010 total employee and taxpayers contributions into the federal employee pension plan were $4.3-billion, an increase of 15.5% over the previous year. Based on the current contribution levels (35%/65%), employees contributed $1.505-billion and taxpayers funded $2.795-billion in 2010.

If the contribution rates for public-sector employees and taxpayers were made equal (50/50) based on the current contribution rates this would have saved taxpayers $645-million based on last year’s numbers. Assuming the yearly increase in contribution rate is the same in 2011 (to $4.95-billion) as it was in 2010 (15.5%), the potential savings for 2011 would have been $742.5 million.
More on link

 

[Edward Campbell]

And a "blast from the past," from the Chrétien/Martin era, involving CF/RCMP/PS pensions, in this report which is reproduced under the Fair Dealing provisions of the Copyright Act from the Ottawa Citizen:

http://www.ottawacitizen.com/business/court+hear+historic+battle+over+public+service+pension+surplus/6122452/story.html

Top court to hear historic battle over public service pension surplus

By KATHRYN MAY, The Ottawa Citizen

February 8, 2012

OTTAWA — Federal unions are making a final appeal to the Supreme Court of Canada this week in a long battle to recover the $28-billion surplus in public service, military and RCMP pension plans that the federal government used to help pay down the deficit more than a decade ago.

The Supreme Court granted the unions and retiree associations leave to appeal because of the national importance of the case, which affects more than 700,000 retired and existing public servants who belong to one of the country’s largest pension plans, many of whom live in the national capital region.

The hearing couldn’t come at a worse time for public service unions, which face growing resentment over the costly defined benefit pension plans that public servants enjoy. The government has indicated these pensions are being reviewed.

The 18 unions and pensioners’ groups are seeking an order to overturn an Ontario Court of Appeal decision that ruled they weren’t entitled to any of the $28-billion surplus at the centre of the historic legal battle over the government’s decision to amortize or write off the surplus against the debt between 1990 and 2000.

The unions and pensioners want the court to recognize that they have an “equitable” interest in the surplus, or at least the 42 per cent of it that experts estimate is how much public servants, RCMP and military contributed to the surplus in contributions and interest over the years.

They argue that Bill C-78, the legislation the government passed in 1999 to give it the authority to take the surplus, didn’t “extinguish” employees’ claim to a portion of the surplus.

The 18 unions and retirees associations face millions of dollars in legal bills, which have left some questioning why they continued to support a losing legal battle. Some were ready to pull out but stayed because of pressure from their members. Many admit they were surprised when the Supreme Court granted their appeal.

The case stands out because of its complexity, uniqueness and the billions of dollars that are involved. The plans are among the largest in the world. The government as lawmaker is like no other employer and has its own rules. The previous hearings saw a cast of accountants, actuaries and other specialists called to testify about whether the pension surplus is real, who owns it and who deserves it.

If the unions and retirees succeed, the government could find itself with an additional $28-billion liability added to its national debt.

Such a victory would be a political nightmare for the government and unions alike.

Public service pensions have been in the spotlight like never before with critics like the Canadian Federation of Independent Business and C.D. Howe Institute attacking them as unaffordable while pressuring the government to reform the costly plans. The C.D. Howe Institute argues the public service plan is underfunded and will cost billions more than expected. The unions bridle at such claims and note C.D. Howe’s analysis never mentions the $28-billion surplus taken from the plans.

The unions and retirees launched their lawsuit more than a decade ago and lost their first bid to recover the $28-billion after a 19-day trial in the Ontario Superior Court, followed by another blow in October 2010 when the appeal court largely upheld the trial judge’s decision.

They have long maintained they were entitled to at least a portion of the surplus, which was partly built out of their contributions and interest paid on those contributions. They’ve argued the pension accounts were “trust funds,” and the government had a “fiduciary duty” to manage the funds and only use them for pensions.

The courts have so far rejected those claims and accepted the government’s argument that there were no assets to give rise to such fiduciary obligations.

The government contends the pension accounts were “legislated ledgers,” or bookkeeping accounts to track of what went in and out of the accounts, but there was no money, stocks, bonds, real estate or any other investment in the accounts. The money that went into the accounts was deposited in the Consolidated Revenue Fund and became public funds for the government’s use.

It also upheld that the government had the legal authority to take the surplus when it passed Bill C-78, the legislation that created a new pension plan and allowed the government to take the surplus.

The Reform wing of the Conservatives lent some support to the unions in 1999 when they voted against Bill C-78. At the time, Reform MP Gary Lunn accused the Liberals of “raiding” public servants’ pension funds and getting their “sticky fingers on $30 billion of private pension funds.”

The unions appealed to the Conservatives when they came to power and asked Prime Minister Stephen Harper to intervene and help settle the issue before the case went to court. Eight ministers in Harper’s cabinet, including Senate House Leader Marjory LeBreton, had voted against the pension reform legislation.

© Copyright (c) The Ottawa Citizen

My guess (made without benefit of legal knowledge) is that the Supremes are taking this case because it is a matter of national importance and not because there is some probability that the  Ontario Court of Appeal erred in its ruling (against the unions); this case will allow the SCC to delineate more clearly the relative "rights" of the government vs its servants.

 

[GAP]

PS pension surplus? correct me if I am wrong, but does not the Federal Government pay those pensions out of General Revenue?

Top court to hear historic battle over public service pension surplus
By KATHRYN MAY, The Ottawa Citizen February 8, 2012
Article Link

OTTAWA — Federal unions are making a final appeal to the Supreme Court of Canada this week in a long battle to recover the $28-billion surplus in public service, military and RCMP pension plans that the federal government used to help pay down the deficit more than a decade ago.

The Supreme Court granted the unions and retiree associations leave to appeal because of the national importance of the case, which affects more than 700,000 retired and existing public servants who belong to one of the country’s largest pension plans, many of whom live in the national capital region.

The hearing couldn’t come at a worse time for public service unions, which face growing resentment over the costly defined benefit pension plans that public servants enjoy. The government has indicated these pensions are being reviewed.

The 18 unions and pensioners’ groups are seeking an order to overturn an Ontario Court of Appeal decision that ruled they weren’t entitled to any of the $28-billion surplus at the centre of the historic legal battle over the government’s decision to amortize or write off the surplus against the debt between 1990 and 2000.

The unions and pensioners want the court to recognize that they have an “equitable” interest in the surplus, or at least the 42 per cent of it that experts estimate is how much public servants, RCMP and military contributed to the surplus in contributions and interest over the years.

They argue that Bill C-78, the legislation the government passed in 1999 to give it the authority to take the surplus, didn’t “extinguish” employees’ claim to a portion of the surplus.

The 18 unions and retirees associations face millions of dollars in legal bills, which have left some questioning why they continued to support a losing legal battle. Some were ready to pull out but stayed because of pressure from their members. Many admit they were surprised when the Supreme Court granted their appeal.

The case stands out because of its complexity, uniqueness and the billions of dollars that are involved. The plans are among the largest in the world. The government as lawmaker is like no other employer and has its own rules. The previous hearings saw a cast of accountants, actuaries and other specialists called to testify about whether the pension surplus is real, who owns it and who deserves it.
More on link

 

[MJP]

PS pension surplus? correct me if I am wrong, but does not the Federal Government pay those pensions out of General Revenue?

Yes and mostly No. 

Short answer. 

Before 2000 pension contributions were dumped into an account and paid interest as if it had been invested in Canadian bonds.  Outside of this there were no other types of investing of the funds.

Since 2000 it had been dumped into a pension fund that is managed and is invested in the financial markets.

The yes part comes into play if there is a shortfall.  Then the Govt is required to make that up out of general revenues.

In Canada only the GIS & OAS are funded out of general revenues.

 

[Pusser]

Yes and mostly No. 

Short answer. 

Before 2000 pension contributions were dumped into an account and paid interest as if it had been invested in Canadian bonds.  Outside of this there were no other types of investing of the funds.

Since 2000 it had been dumped into a pension fund that is managed and is invested in the financial markets.

The yes part comes into play if there is a shortfall.  Then the Govt is required to make that up out of general revenues.

In Canada only the GIS & OAS are funded out of general revenues.

However, prior to about 1990, all federal pensions were paid out of general revenue.  There were no liability accounts and no real accounting for members' contributions.  Another way of looking at it would be to say that the Government said they were paying us one amount, when in fact they were paying us less (i.e. less the pension "deductions").  Then, when we retired, we remained on the government payroll at a lesser rate.

Prior to that (i.e. sometime in the 1960s) there were no pension deductions from pay at all.  When you retired, you simply started collecting a pension, which also came from general revenue.  The only thing that changed when the three federal pension "plans" were introduced was the way were packaged.  The fundamental aspects of how they were funded remained the same pretty much until the beginning of the new millenium.

What I really fail to see is what exactly the unions expect to achieve with their court fight.  Even if they win and the money is put back into the pension fund, we won't see any actual benefit.  Remember that it's a "defined benefit" plan.  What we get in the end is based on our salaries at retirement and has nothing to do with how much money is in the "fund."  What we receive is still going to be 2% x years of service x average of best five years salary.  The amount of money in the "fund" won't change that.  If the "fund" is fat, we don't get any more and if the "fund" is short, the difference comes from general revenue.  In fact, one of the Government's arguments is that since they cover the shortfalls, they have full claim to the surpluses.  The unions et al are spending a lot of money on legal fees to try to make a point that won't provide one additional nickel to any retiree's benefits.

 

[MJP]

However, prior to about 1990, all federal pensions were paid out of general revenue.  There were no liability accounts and no real accounting for members' contributions.  Another way of looking at it would be to say that the Government said they were paying us one amount, when in fact they were paying us less (i.e. less the pension "deductions").  Then, when we retired, we remained on the government payroll at a lesser rate.

Prior to that (i.e. sometime in the 1960s) there were no pension deductions from pay at all.  When you retired, you simply started collecting a pension, which also came from general revenue.  The only thing that changed when the three federal pension "plans" were introduced was the way were packaged.  The fundamental aspects of how they were funded remained the same pretty much until the beginning of the new millenium.

True dat... which is why I said short story.  It isn't that relevant except to highlight that the govt realized that changes needed to be made in order to sustain the pension into the future.  Much like OAS the needs to be.

I find the whole OAS frighten the seniors shell game to be a crap move on the part of the Liberals and NDP.  If they were serious about helping seniors they would strengthen the GIS which is has a much lower means test threshhold.  For OAS one doesn't lose a single cent of it until their annual income is over $60000, which is bit higher than the Canadian average.  Plus the fact that many seniors especially those at that income level usually have greatly reduced debt loads makes that level of income go much further than it would for a younger people.

 

[GAP]

For OAS one doesn't lose a single cent of it until their annual income is over $60000, which is bit higher than the Canadian average.

from Rethink retirement article posted in http://forums.army.ca/forums/threads/104388/post-1113229/topicseen.html#new

Other OAS changes included indexation of benefits (1973), spousal allowance (1975) and the end of universality for high-income seniors (1989). The OAS is clawed back at the rate of 15¢ for every dollar when individual income is above a threshold (for 2012, $69,562). It is fully clawed back when income reaches $112,772.