Public pensions costly for taxpayers

In my last entry in this space, I brought up the issue of the growing economic weapon of mass destruction that is the defined benefit pensions that are largely the luxury of public sector employees.

In my last entry in this space, I brought up the issue of the growing economic weapon of mass destruction that is the defined benefit pensions that are largely the luxury of public sector employees.

The public sector pension problem is fairly complex.

It’s mostly the result of the massive overgrowth of government in the last four decades, and partly the result of public sector union contracts being negotiated by union members on one side and former union members on the other.

It’s also been brought about by an increasing veil of secrecy about the terms of public sector employee contracts.

It becomes a bit of a perfect storm.

As I mentioned earlier, what is coming down the pipe is something that approaches being a form of class warfare.

Millions of regular citizens, those who work in the tax- and wealth-producing sector of the economy, now suddenly face the prospect of being forced to dig even deeper into their pockets in order to come up with the necessary revenue needed to make up for the market losses that have reduced the overall value of public pension plan holdings to a level below what is necessary to meet their commitments.

At the very same time, these taxpayers will also be digging deeper into their own pockets in order to bulk up their own retirement savings in order to make up for recent market losses.

The numbers are real.

The average Canadian puts some $6,000 per year into retirement savings. Most experts say that this number will have to rise by a couple of hundred dollars per month in order for the average 35- to 55-year-old Canadian to recoup his losses, as well as a likely deferral of retirement by one or two years. This is on top of the couple of hundred dollars per month that will be confiscated from our incomes to finance pension plans that were foisted upon us in a somewhat underhanded fashion.

Tax-earning workers are basically exempt from this, as they won’t be required to pony up even more cash for their own retirement, and their employer will also be exempt from the realities of exponentially increasing tax burdens.

It needs to be noted here that decades of increasingly secretive public sector labour agreements have already created an economic imbalance, irrespective of the pension issue.

At one time, not even 30 years ago, public sector workers routinely earned somewhat less than their private sector compatriots, in exchange for almost iron-clad job security and a very good pension plan.

At that time, the public sector was a considerably smaller segment of the workforce. The pensions were sustainable.

But, the public sector has expanded at a rate two and three times that of the real economy that supports it, and wages and benefits in the public sector have also grown to a point where it’s exceedingly rare to find a public sector position that pays less than a comparable job in the tax-paying sector.

This last is a direct result of two things — the lack of legislation against labour action in the public sector (which represents a violation of taxpayers’ rights), and the common habit of having former union members bargaining with the unions, and negotiating pay and pension benefits that often have a direct bearing on the pay and pensions of those same managers.

Increasingly, the pay and benefits of public sector unionized employees have become somewhat secretive, which is a separately troubling aspect.

The whole thing is compounded by legislative bodies that would sooner eat worms than not raise taxes every single year.

In the end, what’s been achieved is a situation where the employees of the taxpayers make more money, have better benefits, retire earlier and with more money than those who spend their lifetimes working in the very businesses that pay their way.

There is time to fix the problem and it won’t be easy. But this ain’t rocket surgery either.

We can’t do anything about pensions already being paid, but we can begin to make adjustments before we face the prospect of rapidly increasing taxes and decreasing services at the same time.

Small adjustments to the pensions of workers close to retirement, larger adjustments for those further down the line, and the complete elimination of defined benefit pensions for those even younger can lessen the blow dramatically, and are the only ethical solution.

The facts and the solutions are easy to grasp. Again, the question is, are there labour leaders and public officials in all the land capable of putting taxpayers’ interests first?

Bill Greenwood is a local freelance columnist.

Just Posted

The City of Red Deer is reaching out to the community to see if anyone wants to move and maintain the Scout Hut from 1937. The land it sits on is needed for a women’s shelter expansion. (Photo by LANA MICHELIN/Advocate staff).
City of Red Deer is calling for proposals for preserving, moving Scout Hut

The 47th Avenue land it sits on is needed for women’s shelter expansion

Students at Olds College will be learning what’s new in agricultural technology at the facility’s Smart Farm. (Photo contributed)
New agricultural technologies explored by students at Olds College

Olds College is launching a new SmartFarm program to help farmers and… Continue reading

Red Deer Rebels forward Zach Smith tips a shot off the post against Edmonton Oil Kings netminder Sebastian Cossa Saturday night at the Centrium. (Photo by BYRON HACKETT/Advocate Staff)
Rebels name new assistant coach, open WHL season on Oct. 1

Rebels will play home opener on Oct. 2

Bobby-Jo Stannard, community development superintendent with the City of Red Deer, and Kelly Andres, city community facilitator, say response to the first mural has been extremely positive. (Photo by SUSAN ZIELINSKI/Advocate staff)
Mural artists making downtown Red Deer vibrant

Preparing for Meet the Street arts and culture festival

Softwood lumber is pictured in Richmond, B.C. File photo by THE CANADIAN PRESS
While lumber prices drop, relief isn’t exactly on the way for consumers

Consumers in Alberta won’t see the benefit of falling lumber prices any… Continue reading

Red Deer South MLA Jason Stephan's decision to travel to Arizona for a holiday has been sharply criticized by many.
Advocate file photo
Jason Stephan: Quebec’s actions undermine interests of Alberta

Prior to serving as a MLA, I structured many commercial partnership agreements.… Continue reading

FILE - Great Britain’s Andrew Matthews, from left to right, Ben Simons, Toby Olubi and Lamin Deen celebrate after their second-place finish in a four-man World Cup Bobsleigh race in Whistler, British Columbia, in this Saturday, Nov. 25, 2017, file photo. British Bobsleigh and Skeleton announced Thursday, June 17, 2021, that the four-man team of Deen, Simons, Olubi and Matthews has been upgraded to the gold medal for a race that occurred Nov. 25, 2017 in Whistler, Canada. The Russian crew that beat them that day has since been disqualified. (Darryl Dyck/The Canadian Press via AP, File)
Britain upgraded to World Cup bobsled gold from 2017 race

Driver of Russian sled was sanctioned for doping violations

Leylah Annie Fernandez, of Canada, returns a shot Marie Bouzkova, of the Czech Republic, in round 1 of the Rogers Cup women’s tennis tournament in Toronto, Monday August 5, 2019. Leylah Annie Fernandez lost 6-4, 3-6, 7-6 (3) to No. 2 seed Ons Jabeur of Tunisia in the second round of the Viking Classic Birmingham on Thursday. THE CANADIAN PRESS/Mark Blinch
Canadian Leylah Annie Fernandez loses third-set tiebreaker against Ons Jabeur

Jabeur now heads to the quarterfinals at the WTA Tour 250 grass-court event

Feist performs during the Polaris Music Prize gala in Toronto on September 18, 2017. Canadian singer-songwriter Leslie Feist is hitting the road with what’s described as an intimate and “unconventional production” featuring all new music.THE CANADIAN PRESS/Chris Donovan
Leslie Feist to debut new music in ‘unconventional’ and intimate ‘Multitudes’ show

Calgary-raised artist will debut show at Kampnagel Festival in Germany

Letter: Improvements coming to two intersections in Red Deer to help cyclists

A letter in the Advocate on June 9 with complaints about cyclists… Continue reading

Opinion
Opinion: Trudeau tight-lipped on Constitution attack

When exactly did Canada become a Constitution-bashing country? For nearly 30 years,… Continue reading

Gwynne DYer
Opinion: Western countries giving out vaccines to poor nations

At the recent G7 summit, U.S. President Joe Biden promised to distribute… Continue reading

Most Read