A taxpayer watchdog group praises the City of Red Deer’s move to dump triple pensions for future senior staffers, but urges the city to cut deeper into the retirement benefit.
The Canadian Taxpayers Federation’s Alberta branch took aim at municipalities that offer two or three pensions to their employees, a perk that costs nearly $25 million annually, by its math.
In Red Deer, 151 employees are eligible for double pensions and 15 senior staffers have triple pensions. The pensions cost taxpayers $540,000 a year.
“Ideally, we’re calling for an end to using taxpayers’ dollars going towards these second and third pensions,” said the federation’s Alberta director, Franco Terrazzano.
“I think that’s extremely reasonable, especially when you consider all of the struggles that families and businesses in Alberta are going through.
“The first pension that city employees get is already very generous.”
Not all municipalities offer the second pension. In Alberta, Lloydminster and Medicine Hat do not. In Saskatchewan, legislation prevents second pensions.
In the private sector, only 20 per cent of employees outside government have a workplace pension plan.
“We’re hearing across the province councils are saying they’re facing budget challenges. The first place they should be looking for savings should be with these golden perks.”
At the City of Red Deer, most municipal employees are eligible for a Local Authorities Pension Plan, which is based on 1.4 per cent of their annual earnings, up to $57,410 as of 2019.
A second plan adds two per cent on salary over the year’s maximum pensionable earnings.
A third pension, designed for senior managers, and entirely taxpayer funded, further increases the pension.
About 15 Red Deer managers are eligible for that pension, known as the Overcap Supplementary Executive Retirement Program.
Red Deer city council voted in April to stop offering that pension to future management hires as a cost-cutting measure. The pension costs the city about $90,000 a year and now likely applies to fewer than the original 15 managers covered at that time.
Terrazzano applauds Red Deer for dropping the executive pension, but says it needs to go further and eliminate double pensions.
City manager Allan Seabrooke said the additional pensions are meant to keep the city competitive when attracting and retaining employees in the wage range eligible for the second pension.
In some other provinces, pensions are organized differently and are more lucrative than Alberta’s single plan.
Seabrooke said the city is not looking at eliminating the second pension, which only applies to about 150 of the city’s 1,200 to 1,300 employees.
“That plan is still in place in Red Deer. It’s never been considered for removal,” he said. “That piece keeps you competitive, particularly with other provinces.
“I don’t think going to the next level is something that is warranted at this time.”
Seabrooke said the city is finding savings in other ways over the next two years.
“There has been a reduction in our workforce and I think that is a good measure for cost savings.”