Net zero saved B.C. taxpayers $3 billion this year. That’s seven per cent of the entire budget.
Sometimes the chattering classes criticize policies (rarely, but it happens). Usually it’s politics (and sometimes, personalities). Policies and politics are part of government, so I’m okay with that. But when policies are misinterpreted and/or deliberately mis-spun to gain political advantage, Canadians tune out.
That’s what’s happening now in B.C. The governing BC Liberals have been accused of handing out raises to various assistants. This has union leaders like Darryl Walker (BCGEU) and Susan Lambert (BCTF) blathering on about how unfair net zero is to their workers, when these guys can get raises.
So let’s do some myth busting.
First, the actual document. Of 43 people listed, 23 had salary changes. One individual’s salary went down due to a demotion, so 22 “got raises.”
Of those 22 remaining, seven raises were the result of promotions. So that’s okay—leaving 15 with raises.
Of those 15, ten went up one step in their respective pay bands. Perhaps their seniority put them up a level—that happens in every part of the public service, including net zero contracts. That’s going to happen in any workplace.
That leaves five people where you might want to get more details on, if possible:
- An EA in the Office of the Premier went up three steps—curious.
- An MA switched from Justice to Jobs, Tourism and Innovation and went up two steps—some ministers with larger portfolios have two MAs; it’s entirely possible that this individual went from sharing an MA workload to soloing. Worth asking about.
- An EA in Aboriginal Relations went up two steps—curious but not unheard of.
- An EA switched from Agriculture to Environment and went up two steps—could there have been some extenuating circumstance, like a significant change involved?
- An MA switched from Health to Finance and went up two steps; most would agree Finance is a far more complex ministry, the most important in government—could that have contributed to the raise?
I’m not out to defend raises for government employees, but net zero is too an important a tool to lose to union spin and innuendo. To suggest that these raises flies in the face of net zero is ludicrous. For real net zero hypocrisy, see the BCTF’s net zero offer to their office staff.
We’re big fans of net zero because it works. Net zero has been the single most effective tool we have seen used to control B.C. spending and the only thing that has kept B.C. within sniffing distance of balancing the budget.
Net zero—negotiating contracts that find savings within existing provisions to fund any increases elsewhere—saved B.C. taxpayers $3 billion this year. That’s seven per cent of the entire budget.
Public sector pay scales have become out of whack with the private sector. In the past ten years, the average government worker has seen their pay jump 35% to $1,023 a week. The average private sector worker, meanwhile, has seen their pay grow five points slower—just under 30%–and only to $777 a week, $250 less than their government counterpart.
Nine out of ten government employees have workplace pension plans. Just over two out of ten private sector workers do. And while 81% of those government employees have the ultra expensive defined benefit pensions—only 14% of private sector Canadians do.
Look at teachers. The public pay sunshine list is full of thousands and thousands of teachers earning more than $75,000 a year, on top of what the BCTF itself calls “the best kept secret” in public pensions—a total benefit package pegged at almost $15,000 annually. The BCTF’s demand that government cut everyone else’s pay through increased taxes to raise their’s should be ignored.
Net zero is not a pay freeze. In net zero, people still get raises as they work their way up the seniority ladder. Unions can still get raises for their workers—if they can find corresponding savings within the contract. The net zero concept is fairer than a simple pay freeze, more effective, and (with the notable exception of the militants in the BC Teachers Federation) was more palatable to unions, moving the vast majority of them to net zero settlements.
Net zero is a model that should be replicated by other red-ink governments across Canada—we’re looking at you, Ontario. It works. It saves money. And it still gives unions the chance to find improvements through trade-offs—it encourages better efficiency and use of taxpayer-funded resources.
- post by Jordan Bateman
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If Jordan is so transparent, as BC director of Taxpayers Federation/Fraser Institute, etc. he might want to let us know who the Canadian Taxpayers Federation is. For example, who are their top ten donors?
i aks because despite the name, the views of his organization do not represent me and I pay taxes to BC and Canada, a lot fo taxes and i am not a public servant..
I am curious as well because in his hysterical anti-union diatribe, he defends pay increases for his politico buddies (you can rest assured that tune will change when the NDP come to power a year from now) while slamming the various public sector unions for objectiing to net zero.
He particularly seems to have it in for public sector pensions. In BC those are well funded through bcIMC. Frankly, the issue for society as a whole (rather than the corporate back room boys who pay Jordan’s salary) is that not enough people have decent pensions rather than public servants have too much.
Yet, Bateman’s fellow traveller conservatives have opposed increasing compulsory pensions (such as increasing CPP benefits) in favour of cutting back on pensions for older Canadians (raising the eligibility age to receive OAS).
“He particularly seems to have it in for public sector pensions. In BC those are well funded through bcIMC”
I don’t think it is public sector pensions as much as it is Defined Benefit pensions. It just so happens the only people left with DBP are public sector unions. Why – because the private sector realized a long time ago that those plans were not sustainable in the long term.
Given governments come under different accounting rules and therefore don’t have to record underfunded liabilities the same way private sector companies do, I would be curious to see your evidence that the tax payer isn’t at risk for the public sector DBP…why is the government so much better at managing the return on their plans than the private sector?
Paul, honey, what evidence do you have that in BC the public sector pensions are underfunded? None, I expect, because there is none. In fact, the public sector pensions are quite flush, under whatever accounting system you want to use. And they are jointly funded.
It just so happens the only people left with DBP are public sector unions.
“It just so happens the only people left with DBP are public sector unions.” No, it’s not just the public sector unions whose employees have DBP’s but all public servants, whether in a union or not.
The issue isn’t whether the government is better at managing (they are certainly not worse) but the fact that those plans have been properly funded (something much of the private sector failed to do and which involved companies stripping pension plans of funds when they thought they were overfunded, and then bleating when the economy turned and they became underfunded).
Paul, honey, I know the Kool Aid tastes great but really, aside from your CTF like hatred of anything in the public sphere, please consider facts.
LOL! Resorting to personal derision as a mechanism for discussion. You are classic.
You claim as fact, the DBPs are funded properly and there isn’t liability for them. I would like to see that literature because it goes against current thinking. Google “under funded pensions Canada” and you will have no shortage of reading….
I don’t hate anyone in the public sector. I just don’t want to leave a mess my son will have to clean up.
I wish I could be so confident. Given that we are likely facing decades of turmoil and low-returns in financial markets I suspect that the only way fixed benefit pensions will continue to be fully funded is if they are refilled at regular intervals. Changing demograhics and economics will make this difficult to avoid. I am in favour of providing civil servants with good salaries so that we attract good people into critical functions like teaching and managing our finances. But I doubt that anyone can afford this kind of pension going forward.
It is not only the public sector that has defined benefit pensions. They exist in the private sector as well, although admittedly with fewer of them because many of those pension plans were raided for “surplus” funds when actuarally they were flush. Like the individual who shot his parents and then threw himself on the mercy of the court because he is an orphan, companies, when the economic crash came, changed the plans because they were no longer sound. The miracle of the private sector.
I agree that I would like more transparency, and that the Canadian Taxpayers Federation does not speak for me as a Canadian tax payer and I would like to know more about its financing. I would think I could find this information on their website if I looked.
On pensions though, I don’t see how we can provide anyone with defined benefit pensions given (i) uncertainty and change in financial markets and (ii) changing demographics. To so do is to risk a huge burden on our children or of default.
Stephen, go look on the CTF site and see if you can find out who funds them. If you can, let me know. I have looked and even asked, but without success.
As for your attack on DBP, actuarally, they can be covered off. I have commented why the private sector has retreated from them and our far right federal government has refused to look at increasing CPP and want to keep us with the lowest pensions in the G8.
It would be simpler for Jordan to jsut tell us. I was not convinced of your position on fixed benefits because I do not believe the past 50 years of investment returns will be a good guide to the next 50. Too much is changing under our feet.
And all defined benefit programs need to go. We need to tie benefits to the underlying performance of the assets that support them. There is no other way.
We are in complete agreement on this one SF. Given different accounting treatment (vs. Private Sector firms), the liability under written by the tax payer is well, scary.
Thanks Jordan – good analysis. However, those civil servants would look at the $3 billion savings as their lost wages. They’ll be demanding that they get to appropriate that $3 billion and that taxpayers should not expect to realize any savings.
Another approach could include government cutting services and lay off civil servants who provided those services, or to privatize the services.
And I do wonder who amongst the civil servants are the most successful at “gaming” the grid for such benefits like performance pay? Net result is that there may be significant budgetary increases for salaries even with a net-zero policy in play.
Johnny, if you take away a benefit that public servants have and you have a so called net zero in place, are the people who suffer the loss not entitled to the savings?
I think it’s something called fairness.
Or is your hatred of public servants so great, so CTF, that you believe they should just be stripped of part of their pay? Just asking?
@ Waltyss – the same could be asked of you with anyone who has a different opinion from you. You are very quick to become condescending and attribute a belief such as “Or is your hatred of public servants so great, so CTF,” with no basis – only that they don’t agree with you.
Using the teachers as an example, net zero doesn’t have to equal less pay. The government suggested harmonizing the benefits packages across all districts (I think there are 40+ different plans) and putting the savings back into wages. As a tax payer, that seems like a reasonable approach that should be explored. However, to say that makes you anti-teacher.
Like I said in my other post, my objective here isn’t to hurt the public sector out of spite. It is to make sure we have a sustainable one that isn’t a mess for my son’s generation to clean up. It is as simple as that.
Three points, Paul old pal (is that more respectful?):
I am suggesting that the public sector pension plans in BC are actuarally sound, even as defined benefit plans. If you have evidence to the contrary, I would love to see it (Please, Ezra Levant is not a credible source for anything.0
I don’t that anyone wants to impose deficits on their children. Pensions are part of the wages/salary we pay civil servants. Pensions in the public service are not negotiated but imposed by statute. So part of your attack on unions is a bit misplaced; if the pensions are too rich (they aren’t in my view) then blame the politicians (primarily Socred/Liberal).
Your concern about deficits might be a bit more credible if you showed equal concern for some of the government boondoggles (the BC Stadium roof, the Basi/Virk payout, etc., the amount wasted to bring in the HST so as to switch taxes from business to individuals, etc.)
Finally, I am not about to defend teachers. I think that their union leadership has done a lousy job of representing them by putting out ridiculous demands. However, remember that what is in their collective agreements was agreed to by the trustees we elect. It is hard to blame the teachers’ union for representing their members and getting them the best deal they can. That is their job. Blame the employers for agreeing to terms that are outside of market.
The last actuarial reports for the plans were completed in 2008-09. As an example, the combined unfunded liability in the College Teachers, Municipal Employees and Teachers plans was about 1 billion dollars. As a result of the actuaries report, employee and employer contributions rates increased in all three plans to fund the plan liabilities. Employer rate increases for the plans were a) College Teachers = .29% b) Municipal Employees = .81% and c) Teachers =1% for the basic account and .25% for the account that provides 100% indexing for inflation. In this case of course, the employer is you and I, the tax payer. It’s also the waitress that served me lunch and the bartender that will serve me a pint; both of whom earn less than what a retired teacher/municipal employee receives as a pension. And by the way, the automatic tax increases to fund the actuarial liabilities, those are courtesy of the NDP just before they were booted out of office. The NDP revised public sector pension legislation that created jointly trusteed plans (i.e. union and gov’t) and the new legislation required that whenever an actuarial report (done every three years) reveals an unfunded liability, the employer (you and I) must contribute more money to the pension plans. So, even 11 years out of office the NDP is increasing our taxes. It should be note as well, plan members in all three plans received cost of living increases ranging from 1.7% (teachers) to 3.2% (municipal) …maybe that’s why they are so pissed at 2 years net zero, they want to keep pace with retired teachers.
Full disclosure…Skippy’s research is self funded.
Skippy, skippy, skippy:
According to the head of the 4 pension plans, as of the last available valuation dates, the public sector pension plan (the largest, I believe) was funded at 103% while the other three were funded at 97 – 99%, this coming off the 2008 market crash.
Oh, and Skippy, according to the guy who should know, the average and median pension amounts are as follows:
B.C.’s public sector pension plans also strive for fairness between the plan members, the plan employers, and the taxpayers. The pension benefits themselves are much more modest than many people believe.
BC Public Sector Pension Payment Amounts for 2010 – Dollars per Year
Municipal Pension Plan
Public Service Pension Plan
Teachers’ Pension Plan
College Pension Plan
Median
$11,241
$14,440
$28,432
$17,597
Average
$15,498
$18,197
$28,698
$19,746
The large scale and professional management of these plans also helps keep costs down. The total cost of investment management and pension administration for these plans is 0.25 per cent, or about one-tenth of what individual investors pay for investment management.
Cost sharing and risk sharing also contribute to the fairness of these plans. In general, B.C.’s public sector plan members are paying 50 per cent of the cost of their pension benefit. In addition, the plan members bear more than 50 per cent of the financial risk in these plans.
If the waitress serving them is working full time and making then she is being paid less than minimum wage except for the teachers pension plan. In any event these are hardly exorbitant pensions except to the CTF haters. Anyone you know, Skippy?
I agree with you Waltyss, this is an extremely biased and misleading commentary. “Net Zero” is the latest catch phase, too bad the standard of living was “Net Zero” too, then it might make sense.
Maybe we should pass legislature that says the banks must operate with a “Net Zero” mandate.
@ Justin:
So ‘net zero’ doesn’t work for public sector pay, yet works perfectly for those pushing environmental green schemes.
Example: The ‘net zero’ LEED buildings at the Olympic Village.
What an irrelevant comment. The two have nothing to do with each other.
@ Steven Forth:
Both groups, unions and environmentalists using the term ‘net zero’ to their benefit – public guilt.
Lets not forget Jordan voted to substantially increase his own pay when he was City Councillor…
@Pat – I don’t think Jordan ever said don’t pay people a fair compensation relative to what they produce. However, when public sector employees on average enjoy a TOTAL compensation package better than the average private sector employee (who’s taxes pay the public sector employee) something is wrong and needs to be corrected.
Patrick,
That is not strictly correct. The Council set forth a mechanism for raises that would affect the next Council thus if they were not re-elected they would not get the raise.
Seems like a good way to do it. If your proposal for raises is sufficiently unpopular you lose the election and don’t get the raise.
Always a race to the bottom with these guys…
This is a snipet of an article that was sent to me from a work associate: The Melman Minute:
…’While Europe is still sorting out its period of political discontent, there is, in my opinion, a major battle brewing in both Canada and the United states which threatens to become an all-out class war. I am referring to the new struggle between the “haves” who work for government and are the beneficiaries of a staggering array of special benefits and the “have-nots”, those who do not work for government but whose taxes support the “haves.” Simply put, the “have-nots” are becoming tired of the prospect of working until they are 65 or older; not receiving pensions comparable to government bureaucrats, not receiving vacation and sick leave benefits comparable to government workers and who are also coming to the realization that they are being paid less than comparable government workers employed in the same fields as themselves.
One simple comparison might include those cafeteria workers at the BC Ferries system who earn better than C$20 per hour to clean tables or sweep floors in addition to earning a host of special benefits while their non-governmental brothers and sisters earn less than half that amount and who receive virtually no similar ‘goodies.
The Canadian Federation of Independent Business recently commissioned a study which concluded, “…wages and benefits in the federal public sector are 40% more than equivalent jobs in the private sector.” A column in the Vancouver Province authored by financial writer Laura Jones concluded, “…In reality, we have a two-tier compensation system. Do the same job in the public sector and you can earn more, take more time off, and retire earlier with a bigger pension…this is a problem which calls for discipline now before we feel the pain of regret when we start looking like Greece.”
We can see the battle is also heating up in America, where states like Wisconsin and Ohio are trying to rein in excessive public service labour costs while the public service unions are fighting them tooth and nail. It could easily become a prime factor in the US Presidential election this coming November.
Can we please find a way to put the service back into Public service workers?
Maybe a novel idea is to limit length of employment for public sector employees, say to 15 years. I would love to see this bunch actually have to prove their own worthiness and not have some union get them benefits for minimal service.
I also strongly suggest in the same context that we limit all elected officials to maximum terms of elected office not to exceed 10 years.
This is an initiative that would greatly strengthen our entire nation and keep massive salaries in check.
I’m more than likely going to be flamed by all the life-timers in elected and hired government positions. Fluidity of the workforce and the ability to provide any sort of real value for the taxpayer are sadly completely ignored by all the fat cows at the trough!
R.
Where are the public sector workers not providing “service”; or at least providing it in a lesser fashion than the private sector.
Oten clerks in a government office are rude but no more so than a clerk in a retail store who often will ignore customers and can be brusque if you get their attention.
How you think that limiting tength of employment would change this certainly escapes my littel brain. Maybe you could enlighten us.
Any background for the $3 billion a year savings figure? Or is that just pulled out of thing air?
Good comments.
Max, good points. NetZero is like the Coca Cola’s. pure BS and bad for you (you know all that Aspartame)!
It was clear long time ago that some people are living like in socialism, when they are on the receiving end and like capitalism when they are on the giving out end.
BC Teachers, Civil LOL “Servants” and others from the venerated workforce like the Police, Fire, Medical…
And despite all their shouting out from behind their unions, for better working conditions, higher salaries… just go and try to rent a room in their basement, on your Starbucks barista salary, and you’ll be shocked how capitalistic they could think!
F$%ing hypocrites!
@West End Gal:
About a month ago I got into a ‘dust up’ (on-line) with an HEU worker – as we all know, their contracts are up as well.
His arguement – when he retires he will only be receiving $35K per year in pension.
My rebuttal – there are families living on less than $35K per year now and have no pension to fall back on.
I am so sick of having hands in my pocket at every turn.
Right now, the BC Federation of Labor, HEU, CUPE and BCTF are all lobbying for more tax payer dollars. How hard done by they have been – how hard it is for them
I guess they just expect it. I don’t know as I don’t get the mentallity that drives union self entitled thinking.
I think those of us in the private sector need to push back. Enough is enough.
West End gal: such anger!!!! Did a teacher once refuse to rent you a basement suite at below market. Poor sweetie1
However WEG, I hate to break it to you but a teacher’s job is infinitely more difficult than drawing out a skinny latte.
Oh, I know, those police officers, firefighters and paramedics. What soft touches. Sitting around all day, polishing their cars and getting free doughnuts at Timmy’s. Let’s slash their pay or better yet contract it out to an American company; pay them $10.25 an hour (or repeal the minimum wage and pay them even less less). Let’s do away with their pensions and make them work to 75 or older. Yeah, that’s what I want protecting me from criminals, attending to me when I have a heart attack or getting me out of the house in a fire. A minimum wage 75 year old without benefits or a pension.
I can only say that if in your hatred you really believe the crud you spout, then you are one sick (not in a good way) pupp..
Listen pal,
Your complete BS self-entitlement is coming out through all your pores. There is a typo in your screen name also … must read WaltAss!
I know of students in their last Engineering year at UBC in the MSc program, that work at Starbucks, and they do just that, cram together with other students in the basements of some teacher/ writer/ environmentalist from Kits, who’s mostly at home on too many mental days off, on tax payers money. Yes on WEG’s money! So better go meditate and.. F…ind yourself!
WEG, You go gal!
Mira I know techers that work 50+ hours a week and live with their parents cause they can’t afford to rent/buy. So what? Anecdotal stories are fun and all but…kinda pointless.
This whole extremist thing this blog brings out is frankly kinda scary…
Mira, honey, calm down. Are you and WEG the hate sisters or what?
Students often live in basement suites and work at baristas.to earn money while at school. So do students training to be teachers. So what? What does that have to do with anything?
If you are suggesting that I am defending teachers who abuse sick leave, then you are wrong. I don’t and I have never suggested that. I don’t have a problem with teachers having a paid day off when they are sick. It is a fairly typical employment benefit and is totally unrelated to students crammed in the basement.
Now, Mira, a potty mouth is never pretty but especially so on a girl. Do you think you can put your point forward (assuming you have one) without uttering obscenities.
You say that “my BS self entitlement is coming through all my pores” Self entitlement to what? I am entitled to express my opinion. Is that BS/
Come on, Myra, honey, you CAN spit out a sentence that is reasoned, not riddled with obscenities and that is not dripping with hatred of others.
Witlyss,you claimed pensions are well funded and attack anybody who claims otherwise.Perhaps you could provide a link to back up what your yelling about.And Witlyss I dont think anyone here really hates teachers,but you…mmmm…. well that might be a different story.
gman, I don’t care whether you hate me or not. Interesting that for the right, if someone disagrees with you, they are fodder for your hate.
With regard to figures, see my response to Skippy above. Those numbers are from an article in the Vancouver Sun on or about December 11, 2011 by the head guy for the 4 public sector pensions. I have been trying to refind it without success.
Here is the article which appeared on December 10, 2011 in the Vancouver Sun:
wo million British public sector workers went on strike on Nov. 30 to defend their pensions. Many Britons are concerned that the disruption could tip the faltering United Kingdom economy into recession. Prime Minister David Cameron has labelled the pension strike the “height of irresponsibility.”
How should British Columbians regard this drama?
The surest starting point is to understand that the U.K.’s public sector pension plans and B.C.’s public sector pension plans are completely different types of financial institutions. The U.K. uses pay-as-you-go pension plans for its public sector workers, while B.C. uses pre-funded pension plans.
Pay-as-you-go pension plans (such as Old Age Security and the Guaranteed Income Supplement in Canada) are entirely unfunded. These plans pay the pensions of current seniors out of revenues collected from current taxpayers. Because these plans have no invested funds, they are not exposed to investment market performance. Their main risk exposure is demographic rather than financial. It is the ratio between the number of pensioners and the number of taxpayers, that largely drives the cost of these plans.
In contrast, pre-funded pension plans, like the B.C. public sector pension plans, invest contributions collected from the current working generation in order to pay, much later, for that generation’s own pensions. Managed well, there is no inter-generational subsidization in these arrangements because each generation pays its own way. Another huge advantage of pre-funding a pension plan is that the investment returns received over a very long investment period help to pay for the pension benefits. Indeed most of the benefits come from accumulated investment returns, rather than from the original contributions. Pre-funded pension plans are not highly exposed to demographic risks, such as the shifting ratio of pensioners to contributors, because each generation is self-funding. The main risk exposure of pre-funded plans concerns financial market returns.
The pre-funding of B.C.’s public sector pension plans make them more sustainable, more cost-effective, and fairer between generations, than their U.K. counterparts.
B.C.’s public sector pension plans also strive for fairness between the plan members, the plan employers, and the taxpayers. The pension benefits themselves are much more modest than many people believe.
BC Public Sector Pension Payment Amounts for 2010 – Dollars per Year
Municipal Pension Plan
Public Service Pension Plan
Teachers’ Pension Plan
College Pension Plan
Median
$11,241
$14,440
$28,432
$17,597
Average
$15,498
$18,197
$28,698
$19,746
The large scale and professional management of these plans also helps keep costs down. The total cost of investment management and pension administration for these plans is 0.25 per cent, or about one-tenth of what individual investors pay for investment management.
Cost sharing and risk sharing also contribute to the fairness of these plans. In general, B.C.’s public sector plan members are paying 50 per cent of the cost of their pension benefit. In addition, the plan members bear more than 50 per cent of the financial risk in these plans.
Sustainability is another important aspect of keeping B.C.’s public sector pension plans fair and affordable. Sustainability is monitored and maintained by conducting an actuarial valuation of each plan at least once every three years. If an actuarial valuation reports an unfunded liability, plan member contribution rates and employer contribution rates are increased equally, and temporarily, so as to pay off the unfunded liability over 15 years.
The intent of this process is to keep the plan at or near a funding ratio of 100 per cent. Over the past decade, which has been a very challenging one financially, this funding strategy has been holding up remarkably well.
Funding Ratio as at Valuation Date – percent funded
Municipal Pension Plan
Public Service Pension Plan
Teachers’ Pension Plan
College Pension Plan
Valuation Date
Year
December 31
March 31
December 31
August 31
2002
105%
97%
2003
96%
97%
2004
2005
94%
94%
2006
102%
98%
2007
2008
103%
98%
2009
97%
99%
2010
2011
not yet available
Providing pension coverage to public sector workers through B.C.’s public sector pension plans is definitely much fairer to future taxpayers than the alternative of not providing pension coverage.
One third of Canadian seniors rely primarily on OAS and GIS for their retirement income. This is what tends to happen to lower and middle-income workers whose employers do not provide an adequate pension benefit. Future taxpayers will bear the cost of supporting those retirees, and they will do so without the assistance of plan member contributions, or accumulated investment returns.
B.C.’s public sector pension plans are important financial institutions that serve some half-million members and about a thousand employers very well. They are better designed and better managed than most of their foreign counterparts.
The natural stress-testing of the past decade has revealed them to be superior performers. The plans have undergone many prudent reforms over the past decade. They deliver great value to members, employers and taxpayers, and make significant contributions to the B.C. economy.
An appropriate reaction for British Columbians to the U.K. public sector pension turmoil would be to be thankful that we are not in a similar mess, and to appreciate the prudent arrangements and management that characterize B.C.’s public sector pension plans.
Bruce Kennedy serves as executive director to the Public Service Pension Board of Trustees, the Teachers’ Pension Board of Trustees and the College Pension Board of Trustees.
Now now Witlyss I don’t hate you I’m only suggesting that your delivery isn’t exactly drawing the love.What I was asking was you to give me a link to what you said but you didn’t.So just to show you Im a fair guy I assume this is what you were referring to. http://blogs.vancouversun.com/2011/12/12/why-our-public-sector-pension-plans-are-better-b-c-s-pre-funded-model-invests-contributions-from-current-workers-to-pay-for-their-pensions-once-they-retire-in-the-u-k-its-pay-as-you/ But after all the work you put into your reply you left out the key observation “The main risk exposure of pre-funded plans concerns financial market returns.” So I would ask you how are those market returns working for ya lately?
gman: Here is what you wrote:
And Witlyss I dont think anyone here really hates teachers,but you…mmmm…. well that might be a different story.
Forgive me if I interpreted that to mean that you and your right wing fellow travellers hated me. It also tends to be the case, sort of the Tea Partyization of Canadian politics by Stevie and friends.
As for how well the BC public sector pension plans are doing, the article gave the last figures available. I don’t know if more recent figures are available but I do know that the managers of those funds keep a quite diversified portfolio of assets including real estate, companies, bonds, etc. Whether the stock markets are up or down at any particular time (and up until last week or so, they were quite up), is only one factor.
Read that the new president of France wants to tax anyone that makes over $1M at a rate of 75%.
Wonder how well that is going to go over.
Wonder how long before France see’s a max exodus of high income earners.
How convenient: Jordan Bateman, former BC Liberal riding association president, defending salary bumps for his BC Liberal EA and MA friends.
Hi Waltyss,
I am afraid your numbers are way off. According to the actuarial reports the funding ratios for the major plans do not exceed 90 %. As an example the teachers plan is funded at 89 %. With about a $300 million unfunded liability. The average pension for teachers retiring in 2010 was $35.2 while the median was $36.1. The Plan is not funded 50/50 but about 65/35 by the tax payer. And of course, the teachers contributions are not a cost to the plan members but deferred tax protected savings. as far as administration costs, guess who pays that….yes us the taxpayer. There is no sharing of risk as you suggest. The plan benefit us guaranteed…by us the employer. My information is drawn from the reports of the plan actuaries and not from plan advocates and beneficiaries who put spin i the press. I note that you do not dispute the $ 1 billion liability nor the COLA increases nor the automatic cost to tax payers to fund theses plans so I assume you agree.
Let’s see. i can believe the Executive Director of the plans or someone who him or herself Skippy. Forgive me but I think i will go with the ED.
@Waltyss:
The UK is back into recession mode. Just thought I would share that with you.
Spain, swirling the toilet, France – same, Greece, bankrupt.
Greece’s big issue is the union/socialist stronghold. They would rather ignore their next debt payment and go back to the Drackma (sp?).Problem- if Greece ingnores their next debt payment, the markets are going to slide right across the board and yes, it will effect Canada.
But then that is socialism for you – expecting someone else to pick up the tab.
@Max – “expecting someone else to pick up the tab”
Exactly and my concern is that “someone” becomes my kids. As responsible parents and citizens, we need to do what we can to ensure we don’t leave them that huge problem.
I know facts don’t matter when you are mired in your ideology but Britain has a right wing government; France until last weekend had a right wing government; Spain has a right wing government and in Greece (which has horrendous problems) most of the unsustainable debt has been incurred under right wing governments who then lied about and tried to hide the debt. They also didn’t bother to collect the taxes.
So, other than the fact that you don’t like “socialism”, whatever that may be, at least put the blame where it belongs.
If you read what was posted yesterday about the sustainability of the public sector pension plans, you will see the situation is different.
I admit the problem arises where there is a disconnect between the services people want and the taxes they are prepared to pay. That is a huge US problem for example where the “socialist” Chinese are keeping them afloat.
In our case, you have governments cutting taxes irresponsibly and then saying that unless we cut the service we can’t sustain it. The Fraser Insittute and the CTF cheer and most regular folk wonder what happened.
But,. Max, keep drinking the KoolAid. it’s all “socialism” and, of course, the boogeyman under your bed.
@Waltyss:
The UK has a right wing government now. Prior to the fall of 2010 – the Labour Party had been in power for what…a decade plus?
When I visited Wales in 2009, there were over 750,000, 18 – 25 year olds unemployed (it was closer to 800,000). Which resulted in lots of crime as all these kids did was hang in the streets.
And you wonder why they voted for change?
Max: And your explanation for France which has right wing governments since the ’80′s and has high youth unemployment is?
Waltyss,
You raise the importance of facts and you quote the Bruce Kennedy article from the Vancouver Sun. Regarding the pension benefit amounts, I note the following. Kennedy quotes the amount of pensions as moderate yet his stats are very misleading. The pension amounts he relies upon include recipients who have only been in the plans for 10, 15 years. In other words, those who have did not retire from the public service, but quite before acquiring a full pension. Looking at those who have 25 years service or more in each of the plans, the average annual pension benefits are as follows ( those retiring in 2010); Teachers = $44.5 thousand, Public Service Plan = $37.06 thousand and Municipal Plan = $ 38.6 thousand. So, when you focus on those employees who actually retire and receive the full defined benefit the tax payer funds, the picture is quite different and the disingenuous claims of Bruce Kennedy are obvious. Regarding the funding of these plans, yes they are funded better than the Euro plans. that is because of the burden imposed on the taxpayer. In 2005 the average employer cost( i.e. taxpayer) per active member in the public sector pension plan was approx. $3700. In 2011, that cost was about $5300 per active member, So, we the taxpayer, in order to keep that plan flush have had to pony up an extra $1600 per member per year or a 43% increase in cost. So, where do our tax dollars go? looking at the investments of the teachers, municipal and pubic sector plans combined, total assets invested in equities is about $15 billion is invested in foreign equities… in the US and overseas. So, our income is taxed away, $15 billion of which is invested outside of BC and Canada to fund the lifetime income of public sector employees.
Once again, all research funded by Skippy
Skippy old pal, it is wonderful how you can manipulate your statistics to suit whatever point you want to make. Kennedy was not being disingenuous but simply stating what is an average and a median pension.
You want to remove those who have less service and only focus on those who will receive a higher pension.
Why only those who have served 25 years? Choose those who have worked 30 years or more and your figures will go up.
Ah, Skippy, lies, damned lies and statistics. Ain’t numbers fun
Well you have the wage controls when do we get the other side of the coin price controls
Governments set policies that affect factors like the share of income that capital and labour earn, inflation and the redistribution of income through taxation all of which have a big bearing on how much pension income a DC plan will generate. Therefore, there is no way politicians should have a DB pension plan and escape the consequences of their decisions. As for the public sector, it is not reasonable for them to expect taxpayers to take on the risk of public sector DB plans as well as their own risk in their DC plan.
There should be no DB plans for politicians or public sector employees.