Toronto Sun: Feds have $65B pension funding shortfall: C.D. Howe
“Most federal employees in this country have what’s known as defined-benefit pensions, the most stable of all benefit plans since contributions are fixed. And higher-income public servants often qualify for special retirement compensation arrangements.
Backing promises to public service workers, the RCMP and Canadian Forces would require contribution rates of 35%, 41% and 42% of pay respectively, the report says citing the chief actuary.
Actual contributions to these plans today are 19%, 22% and 21% respectively. On average, two-thirds of costs are borne by the government.”
I am going to open a huge can of worms on this topic. I would contend that public sector unions should be banned. I have no problem with private sector unions. If the employees want to unionize at private company they can do so at their own peril. The owner of the company can simply close shop and open a new one if they can’t compete in the market place saddled with the extra costs associated with a union work force.
The problem with public sector unions is that the Government typically has no recourse. They can’t just close up shop and are stuck with the often over the top demands of the unions. The golden pensions are one of these issues. The public sector needs to be scaled back and these defined benefit pensions should be the first item on the chopping block. Government employees should open an RRSP just like the rest of us and not expect to paid their salary & benefits for the rest of their lives. Government services should be provided at the lowest cost and not a way to create high paying jobs to Canadians. Add the provincial and municipal unfunded pension liabilities and the number is much more that $65B.
New Jersey is an example of how out of control these commitments can get:
“One state retiree, 49 years old, paid, over the course of his entire career, a total of $124,000 towards his retirement pension and health benefits. What will we pay him? $3.3 million in pension payments over his life and nearly $500,000 for health care benefits — a total of $3.8m on a $120,000 investment. Is that fair?
A retired teacher paid $62,000 towards her pension and nothing, yes nothing, for full family medical, dental and vision coverage over her entire career. What will we pay her? $1.4 million in pension benefits and another $215,000 in health care benefit premiums over her lifetime. Is it “fair” for all of us and our children to have to pay for this excess?”
New Jersey Governor Chris Cristie is also an example of how to handle unions: