Pension contributions to increase to 50:50
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Eye In The Sky
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Just in time for Christmas! 
George Wallace
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Interesting how there seems to be a trend to piss off Federal worker bees. First there was the termination of Severance Pay. Then came the Budget Cuts and "realignment" of job positions. Now an increase/decrease in who is paying what into Federal Pension Plans. Haven't seen anything yet on Senators' and MPs' pensions, etc.
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They should just dump the entire pension and go for a group RRSP plan. Every financial institution in Canada would eat the administration costs to get the CF account, the RRSP program is flexible enough to accommodate Regular and Reserve members and all members get an immediate benefit (tax relief) as well as the long term benefit of the RRSP's accumulated savings. Members can also tailor the investments inside the plan to their own needs and risk tolernence.
Even with a 50:50 employer/employee contribution split, the CF and the Government would save literally millions/year on the administration cost of a pension plan (when I worked in the financial world, this was the biggest selling point of group RRSP's; the cost of administering and running a pension is huge and smaller business simply cannot pay that and still have a viable pension plan), which is the point of this exercise anyway. Changing over would need a grandfathering period, but otherwise should be simple to do.
As a BTW, I passed this up the chain of command back in the 1990's when reserve pensions were beeing mooted; the pension office sent me a nice note saying my suggestion had been placed in the round file. Makes you wonder who's interests are being looked after.
BTW George, there was an adjustment to Federal MP pensions.
Even with a 50:50 employer/employee contribution split, the CF and the Government would save literally millions/year on the administration cost of a pension plan (when I worked in the financial world, this was the biggest selling point of group RRSP's; the cost of administering and running a pension is huge and smaller business simply cannot pay that and still have a viable pension plan), which is the point of this exercise anyway. Changing over would need a grandfathering period, but otherwise should be simple to do.
As a BTW, I passed this up the chain of command back in the 1990's when reserve pensions were beeing mooted; the pension office sent me a nice note saying my suggestion had been placed in the round file. Makes you wonder who's interests are being looked after.
BTW George, there was an adjustment to Federal MP pensions.
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To be fair to government, some of this was negotiated away by unions.George Wallace said:
However....
.... VERY good point there.George Wallace said:
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Thucydides said:
Great idea. I'd rather be completely responsible for my own pension: investing in markets I want and in line with my personal risk tolerance. And if I lose or make bad decisions? My fault.
P.S. Quick turnaround from the Pensions Office: both Reg and Res members currently contribute 33% with the CF contributing the other 66%.
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And can you find a company that will guarantee the funds will be there into perpetuity? What happens when something like what happened in the states, or let's say Nortel, where the money just disappeared, and employees were left with nothing? One of the reasons people stay in the CF is a defined, guaranteed pension at the end of 20/25/35 years.Thucydides said:
From the briefing I received, it will likely take between 7-10 years to bring the ratio up to 50/50.
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captloadie said:
Very good point and I wanted to expand on this idea as well.
In my opinion NOTHING is better than a defined benefits pension. You are GUARANTEED a % of your best "x" number of years not matter what happens in the market. If anyone has been following the markets lately they are not doing so great and there are many people who should and would normally retire but can't afford to because they have lost 100's of thousands of dollars in their RRSP portfolio. In general, no one is winning in the markets these days be it bonds or equities. (It doesn't look promising in the near future either...)
Another benefit of the defined benefits pension is that it applies for the rest of your life (and spouses), compared to your RRSP when it runs out that's it! All you have left is CPP, etc. (Other government funded defined benefit plans). Even if you die before collecting your pension or soon after before being able to collect the majority of it the balance with interest is paid to your estate.
Even at a 50/50 contribution you can't argue the value of a guaranteed dignified retirement where you do not have to worry about finances or living below the poverty line.
In my personal experience my Grandfather has now been retired for over 40 years and has now collected from his defined benefit pension from the province of Alberta for longer than he contributed. A nice perk for serving the people of the province and taking a lower salary than what he might make in private industry.
Just some food for thought.
PA
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pa471856 said:
Incorrect. There is a minimum payout, but no balance cashout (at elast for the CFSA).
The public service is the great unequalizer: jobs valued lower in the private sector are paid more in the public service; senior professionals are paid less. For example, the assistant deputy minister of materiel in DND is paid $168K to $198K. Even adding in the benefits package, that's materially (no pun intended) less than industry equivalents.
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dapaterson said:
Agreed. However, there are pro's and cons to both. Job security etc, is an advantage of public service. My argument is not that public service is an equalizer or not, but that one of the perks to public service is a defined benefits pension and that it would not be in the best interest of a public employee to disband such a pension and accept a defined contribution pension.
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The problem with a defined benefit retirement package is that is a millstone around the neck of the tax payer. These are called unfunded liabilities, and compounded with massive public debt these programs become a destabilizing force on the economy.
Have a look at California, and even worse, our lovely Ontario. The unfunded pensions are crushing the taxpayer and making the financial future bleak. A pension that pays out much more than what was ever paid into it is scary and shameful, is theft. It is not the fault of the person who collects it; it is the fault of the politicians and the voters that supported it.
There is no free lunch. Someone is going to pick up the tab, and if you have no problem passing the bill to your kids or grand kids, then I guess you will have no problem with a defined benefit retirement plan.
BTW the tiresome myth of the underpaid government worker does not stand up to scrutiny. Please show me where the average worker of comparable qualifications gets the benefits and pay of the average government employee. I agree that in the 70's and 80's that claim may have had some merit, but the collective agreements over the last decade and a half have made public sector employees well paid by any comparison
For example, if you compare an Alberta government employee's wage with a person of similar academic accomplishments and job experience, you will see the Alberta government employee has a heck of a good deal. Let's compare a Public servant level 3 vs a private sector employee. A PS3 will have a liberal arts degree. (Most PS 3's have served for 5-10 years in government) The PS3 employee will make approximately 70-80K a year, have paid vacation time, generous leave allowances for both personal and family reasons, they will have a fully funded pension and benefits package worth well in excess of $10,000 per year on top of their salary. They will also have the protection of the union, EVEN IF they refuse to do their job or a completely incompetent.
Now compare that to a person with a liberal arts degree in the private sector. They will be qualified to work in McDonald's, but if they are lucky they might get a job in an office mail room, or maybe, a situation that offers some advancement. After 10 years they might see a wage that comes close the starting wage of a PS3 employee. In any case, the range in pay is likely to be half of what the public sector employee earns, AND most likely will have little to no benefits, never mind a pension of any kind. (It goes without saying that even if the public sector employee is working in a unionized shop, they will likely not have such robust union support for their incompetence or lack of performance.
On top of all the benefits the government employee gets, they have a guaranteed fixed benefit pension!
Approximately 80% of government employees get this benefit in Canada, but it is not fair to the taxpayer. For those that work in the government, and in particular for those that actually are concerned for their country, consider this: the unfunded liability of a generous pension plan critically harms government services to the point where the total costs of manning essential services, prevents future employees from having proper equipment and support. There cannot be more costs associated with former employees than current. This is why it must change. I am not suggesting the military of any other public servant live in poverty in their golden years, but their retirement costs must not make indentured servants out of future employees.
Have a look at California, and even worse, our lovely Ontario. The unfunded pensions are crushing the taxpayer and making the financial future bleak. A pension that pays out much more than what was ever paid into it is scary and shameful, is theft. It is not the fault of the person who collects it; it is the fault of the politicians and the voters that supported it.
There is no free lunch. Someone is going to pick up the tab, and if you have no problem passing the bill to your kids or grand kids, then I guess you will have no problem with a defined benefit retirement plan.
BTW the tiresome myth of the underpaid government worker does not stand up to scrutiny. Please show me where the average worker of comparable qualifications gets the benefits and pay of the average government employee. I agree that in the 70's and 80's that claim may have had some merit, but the collective agreements over the last decade and a half have made public sector employees well paid by any comparison
For example, if you compare an Alberta government employee's wage with a person of similar academic accomplishments and job experience, you will see the Alberta government employee has a heck of a good deal. Let's compare a Public servant level 3 vs a private sector employee. A PS3 will have a liberal arts degree. (Most PS 3's have served for 5-10 years in government) The PS3 employee will make approximately 70-80K a year, have paid vacation time, generous leave allowances for both personal and family reasons, they will have a fully funded pension and benefits package worth well in excess of $10,000 per year on top of their salary. They will also have the protection of the union, EVEN IF they refuse to do their job or a completely incompetent.
Now compare that to a person with a liberal arts degree in the private sector. They will be qualified to work in McDonald's, but if they are lucky they might get a job in an office mail room, or maybe, a situation that offers some advancement. After 10 years they might see a wage that comes close the starting wage of a PS3 employee. In any case, the range in pay is likely to be half of what the public sector employee earns, AND most likely will have little to no benefits, never mind a pension of any kind. (It goes without saying that even if the public sector employee is working in a unionized shop, they will likely not have such robust union support for their incompetence or lack of performance.
On top of all the benefits the government employee gets, they have a guaranteed fixed benefit pension!
Approximately 80% of government employees get this benefit in Canada, but it is not fair to the taxpayer. For those that work in the government, and in particular for those that actually are concerned for their country, consider this: the unfunded liability of a generous pension plan critically harms government services to the point where the total costs of manning essential services, prevents future employees from having proper equipment and support. There cannot be more costs associated with former employees than current. This is why it must change. I am not suggesting the military of any other public servant live in poverty in their golden years, but their retirement costs must not make indentured servants out of future employees.
MJP
Army.ca Fixture
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Cardstonkid said:
This was true before 2000, but since then PSP Investments, a crown corporation has handled the contributions through various financial means. Yes any shortfall has to be made up by the govt but even with the downturn (2009 was a bad year) the fund is still pretty healthy.
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Cardstonkid said:
You only make one side of an arguement here......................trust me, there isn't a tradesman in my building that couldn't make a lot more money in the private sector.
If you wish to present something as fact,...try to have them.
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I think you are missing the point. A qualified tradesman is not qualified to work as a public employee in most government departments. Compare a person with the qualifications to be a public servant in most departments with a person of similar qualifications outside of government. The public employee almost always is both paid more and has a much more generous retirement package.
Of course there are exceptions, a geologist working for Shell is likely to make as much or more than a government geologist, but the overwhelming majority of government employees have liberal arts degrees. They are not in much demand outside of government and the fast food industry.
Of course there are exceptions, a geologist working for Shell is likely to make as much or more than a government geologist, but the overwhelming majority of government employees have liberal arts degrees. They are not in much demand outside of government and the fast food industry.
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Cardstonkid said:
Pardon???
OK,.....we are getting off topic here but I've never worked in a Govt. building that didn't have electricians, plumbers, etc..................they aren't here for the money as much as job security and pension benefits.
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I do work for the government (Alberta) and yes, more often than not, building maintenance folks are paid less, even those with trade tickets, but they are a tiny minority of government workers. In the case of the Alberta government, most property management folks are not government employees. They are contract employees with much lower pay and benefits than union employees.
Cardstonkid said:
I think you are looking at your own little piece of the world. Where I am at, we have plenty of federal employees that make less that they could in the private sector. Some gave up 6 figure salaries to come for stability and benefits. Engineers, procurement types, technologists etc. I can assure you that their degrees are not liberal arts degrees. Are some classification groups better paid than their civy counterparts? yep. And some are not. Your brush is a little broad.
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