Defined-benefit pension plans enjoyed by government workers are back in the spotlight thanks to the Fraser Institute.
And who did they use an example of fiscal prudence in regards to government pensions? The NDP in Saskatchewan.
In 1977, under Premier Allan Blakeney, the Saskatchewan NDP converted "all public-sector pension plans to defined contribution from defined benefit," stated Mark Milke, a senior fellow with the Fraser Institute.
"Saskatchewan stands as the one province that foresaw the looming problems with definedbenefit pensions in the public sector," he added. "By moving to defined contribution plans, the 1970's era NDP government took the necessary steps to protect future generations of Saskatchewan taxpayers."
Government funded definedbenefit pension plans are a black cloud on the horizon for future taxpayers. In layman's terms, that means that any pension funding shortfall will be topped up by the taxpayer. If pension payments to government workers are $100 million, but there is only $90 million in allotted revenue, then the taxpayer is on the hook to make up the difference.
Nobody would or should begrudge any worker from the government or private sector their pension. They've worked for it, and they're entitled to what is rightfully theirs. But pension funds should be taken outside of the government and/or company to be invested for, hopefully, solid returns so that workers will have enough pension money to enjoy their retirement.
Whoever did the negotiating for such perks is probably due for a pat on the back from those receiving the benefits. Weak-kneed politicians were obviously no match, or simply thought that the day those payments are due would be made far in the future, by future generations.
Well, that time is now, and the bills are piling up, significantly.
B.C. is one of eight provinces to have found it necessary to increase their pension contributions for the public sector in order to cover pensions.
The Fraser Institute points out that Alberta made what was supposed to be a one-time payment of $60 million to cover a pension funding shortfall in 2002. In 2009, the government contributed another $1.2 billion.
Detractors claim that every time the Fraser Institute issues information, it's doomsday declarations and negative think. We ought not overlook the fact that the Fraser Institute is a well respected team of economists, well versed in their craft.
We may not like some of the facts and figures that they trot out for out consumption, but they speak to important issues that we need to be aware of.
On another note, the Canadian Taxpayers Federation issued a call for the government to revoke pensions for crooked politicians.
The CTF added its voice to a chorus backing Bill C-518, a private members' bill that would eliminate pensions for MPs or senators convicted of a crime. It used former Liberal MP Raymond Lavigne, who was jailed for fraud and breach of trust, yet is to receive $67,000 in annual pension payments.
Should he live to age 90, he will have received a $2 million pension.
It wouldn't be a stretch to believe that most Canadians would support such legislation, to avoid such ludicrous payouts, especially with the bad behaviour of senators currently in the spotlight. We can almost hear the cheers.
But imagine the jeers of public sector pensioners should governments tighten the public purse as the day of payout nears.
The NDP had it right.
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