Future of Government Pensions (PS, CF & RCMP) & CF pension "double-dip"

[Old Sweat]

However, prior to about 1990, all federal pensions were paid out of general revenue.  There were no liability accounts and no real accounting for members' contributions.  Another way of looking at it would be to say that the Government said they were paying us one amount, when in fact they were paying us less (i.e. less the pension "deductions").  Then, when we retired, we remained on the government payroll at a lesser rate.

Prior to that (i.e. sometime in the 1960s) there were no pension deductions from pay at all.  When you retired, you simply started collecting a pension, which also came from general revenue.  The only thing that changed when the three federal pension "plans" were introduced was the way were packaged.  The fundamental aspects of how they were funded remained the same pretty much until the beginning of the new millenium.

I am not sure if you are including the CFSA in this statement, but when I joined the Canadian Army in 1957, I had 6% deducted as my pension contribution from day one. At some time in the mid-sixties the contribution was increased to 7.5% with the introduction of the CPP.

 

[Pusser]

I am not sure if you are including the CFSA in this statement, but when I joined the Canadian Army in 1957, I had 6% deducted as my pension contribution from day one. At some time in the mid-sixties the contribution was increased to 7.5% with the introduction of the CPP.

I could be wrong on the timing.  I simply assumed that the change happened in the 60s because there were a lot of pay and compensation reforms at that time.

 

[Edward Campbell]

And more, mostly "con," but a bit "pro" public sector pensions in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/news/politics/across-canada-economic-woes-put-public-service-pension-plans-in-the-spotlight/article2341570/

Across Canada, economic woes put public-service pension plans in the spotlight

PAUL WALDIE

From Friday's Globe and Mail
Published Thursday, Feb. 16, 2012


From fewer firefighters in Saint John to increased taxes in Montreal and Regina, the battle to control public-service pension plans is hitting home for Canadians across the country.

Governments at all levels are grappling with massive deficits in their public pension plans thanks to a combination of factors, including low interest rates, sluggish investment returns and an aging work force that is retiring in record numbers.

The City of Montreal has seen its annual pension contributions increase to $609-million this year, up $132-million from a year ago. In 2005, the city’s annual obligation was just $130-million. In Saint John, city officials are cutting costs to cope with a $163-million shortfall in its civic pension plans. Regina taxpayers and city employees are facing a 25-per-cent increase in annual contributions to overcome a $246-million deficit in the civic pension plan. In Ontario, the Ontario Teachers’ Pension Plan’s shortfall stood at $17.2-billion as of last year, resulting in a reduction in benefits, and in Ottawa the federal government is considering changes to Old Age Security, arguing it is unsustainable.

“The stress of these things is starting to be felt across the country,” said William Robson, chief executive of the C.D. Howe Institute, a Toronto-based think tank. “More and more of these obligations are now giving rise to cash payments that you now have to make.”

Mr. Robson believes that in some cases the liabilities in public-service plans are much higher than stated because governments use unrealistic assumptions. For example, in a study he released in December, Mr. Robson concluded that the federal government’s pension liability is $227-billion, roughly $80-billion higher than the government reports. Those figures have been disputed by government officials who stand by their calculations.

Either way, Mr. Robson said, the issue of public pensions has become critical for all governments. “Every government in Canada is going to have to look harder at these plans,” he said.

He and others cite an aging workforce, a surging number of retirees and relatively generous benefits as the main reasons these plans are in trouble. Nearly all public-service plans in Canada are so-called “defined benefit” plans, meaning future benefits are guaranteed regardless of how the fund does financially. By contrast, most private-sector pensions are “defined contribution” plans, meaning future benefits depend on the performance of the investments.

While all plans have some form of joint sponsorships, with government and employees contributing a share, it can be an unequal relationship. When the plans are in a deficit, both sides have to help make up the shortfall. But when there is a surplus, taxpayers don’t usually receive the benefit, just the plan members.

Solving the problem isn’t easy. Montreal has raised taxes steadily to meet its pension obligations, and the mayor of Quebec City, Régis Labeaume, has called for a provincewide summit to discuss pension reform. Some labour unions have called Mr. Labeaume’s suggestions an attack on them. The city of Saint John has already announced layoffs to meet its pension-plan obligations, and it is proposing cuts to the plan’s benefits, such as reducing the inflation protection.

In his report to the Ontario government this week, economist Don Drummond singled out pensions, saying pension expenses could more than triple by 2018. He recommended that, in order to overcome funding deficits, the province should cut benefits instead of increasing contributions. “Higher contribution rates mean lower disposable income for plan members, particularly for those at the outset of their careers,” he said in the report. If benefit changes can’t be negotiated, he added, the government should legislate them.

But others say that the criticism of public-sector plans is overdone, and that there are plenty of examples of successful pension plans that do not burden taxpayers. Linda Haslam-Stroud, president of the Ontario Nurses' Association, said the Healthcare of Ontario Pension Plan is one of them. The $36-billion plan was fully funded at its last valuation in 2010, and the contribution rates for the government and employees are lower than other major Ontario government plans. Plan members also agreed several years ago to drop guaranteed inflation protection, Ms. Haslam-Stroud added, but the plan has still been able to keep pace with inflation.

“I’ve had enough of being targeted as the bloated public service,” she said, decrying critics in the business community and media. “If we have a reasonable pension plan, we will not be a sap on the social welfare system.”

While there are, indeed, "plenty of examples of successful pension plans that do not burden taxpayers," there are many, many more that do, and a balance must be found between increasing contributions and cutting and/or delaying benefits.

 

[jollyjacktar]

From: [email protected]
Date: Thu, 16 Feb 2012 12:47:27 -0500
Subject: Update on Bill C-215: Vote Results

Update on Bill C-215:

Thank you for your ongoing interest in Bill C-215.  Unfortunately, the bill was defeated by all Conservative MPs in a vote on February 15th.  Every Conservative MP in the House was “whipped” by Stephen Harper, with the support of Veterans Affairs Minister Steven Blaney and National Defence Minister Peter MacKay, to vote against this private members bill.  That means the bill will not proceed to a parliamentary committee for further study.  And since the bill was defeated, it cannot be re-introduced in Parliament until after the next federal election.

Once again, I would like to thank John Labelle, Roger Boutin, and Mel Pittman, who are constituents from my riding of Sackville-Eastern Shore for all of their work on this bill.  For the last six years, they have worked tirelessly to gather support.  Over 110,000 Canadians signed a supporting petition and major veterans’ organizations like the Royal Canadian Legion, Canadian Veterans Advocacy, and Army, Navy and Air Force Veterans in Canada supported the initiative. 

Shamefully, the Conservative government continued to block this bill at every opportunity.  They have repeatedly voted against this bill – not just once – but multiple times and defied the will of the House after MPs clearly voted for an end to the clawback of veterans and RCMP retirees’ pensions under the NDP Veterans First Motion in 2006.

New Democrats have always said that the best way to honour those who have served our country is to ensure that veterans and serving Canadian Forces members have the support and resources they need. 

We will continue to press the Harper government to end CF and RCMP pension reductions and also implement key reforms for programs and services for veterans and their families.  Like action on veterans’ homelessness, reforms to the New Veterans Charter, a Veterans Independence Program for RCMP veterans, ‘marriage after 60’ pension changes, better care for those suffering from PTSD, shorter wait-times for veterans’ disability applications, the elimination or reform of the Veterans Review and Appeal Board and access to veterans’ hospitals for our modern-day veterans.  We also continue to call for an increase for funeral expenses and a public inquiry into Agent Orange and defoliant spraying at CFB Gagetown.

Thank you again for your interest and support for Bill C-215.  For your information, I have attached the voting record of all MP’s on Bill C-215 or please refer to http://openparliament.ca/bills/votes/41-1/131/.



Sincerely,

Peter Stoffer, MP, Sackville-Eastern Shore

Official Opposition Critic for Veterans Affairs



2900 Hwy #2 Fall River, NS B2T 1W4

Tel:  (902) 861-2311  Email: [email protected]

Portion of an email I received WRT the private member's bill on the CF/RCMP clawback.

 

[Stoker]

So on Fri I was told by a friend in Ottawa that as of 1st Apr the pension rules are being amended and the annuitants will no longer be able to collect their pensions and work full time class B/C. Essentially their pension will stop and they will be allowed to pay in to it. Anyone hear the same thing?

 

[Remius]

So on Fri I was told by a friend in Ottawa that as of 1st Apr the pension rules are being amended and the annuitants will no longer be able to collect their pensions and work full time class B/C. Essentially their pension will stop and they will be allowed to pay in to it. Anyone hear the same thing?

There is a lot floating around right now.  Heard that specific thing as well.

 

[Stoker]

There is a lot floating around right now.  Heard that specific thing as well.

Thanks that's what I thought. If this goes through it certainly will change the way some people are employed,probably a good reason for doing it too.

 

[SeaKingTacco]

There are a lot of rumors floating around.  It would be best not to speculate or make career decisions until the official annuitant policy is announced.

 

[Remius]

That being said, preparing doesn't hurt and can keep you ahead of the eight ball.

 

[George Wallace]

I am hearing similar rumours.  One rumour being that there will be a "Grandfather Clause".

Now if we actually look at this, it only makes sense for someone who has not done 20 - 25, or more, years in the Reg Force; and they usually don't have a Reg Force Pension anyway.  The question that begs to be asked is:  Does this now mean that 'Annuitants' can now have Full Time Class A/B, B or C employment without the requirement for an 'Annuitant Break'?  If it does, then it should not create much of a problem if the Annuitant has a nice 'nest egg' in the Bank.  If a former CF member on Class A is now expected to give up a Reg Force Pension to contribute to a CF Reserve Pension Plan, then it is a serious kick in the junk.  Currently there are no guarantees to any "Full-time" Class B employment in the Reserves for any reasonable length of time.  Eighty-nine days of Class B employment, with no guarantee or hint of future employment, does not equate to giving up a Reg Force Pension for a pension that will perceivably offer less benefits.

Consequences would be that valuable experience of former Reg Force pers who for whatever reason think of joining the Reserves would be lost.  They will look at this as a loosing proposition.  With the training delta that is occurring in many Trades between the Reg and Res soldiers, this is a very negative plan.  In the Armour Reserve world, for instance, if they can attract former Reg Force Armour soldiers to the Reserve Regt, they will have some of the knowledge avail to pass on to Reservists who have no opportunities for hands on training of equipment they do not possess.  If they have no credible means to attract such experience, the Armour Reserve units will become  (some will argue that they already are) unemployable as armour soldiers if the opportunity arises for them to work in such a capacity with the Reg Force. 

I am convinced that many of these decisions are being made by people who have no idea of what they are ruling on and their main objective, besides cost saving for the government, is more often a very large bonus to their already large pay cheques.

 

[dapaterson]

I am hearing similar rumours.  One rumour being that there will be a "Grandfather Clause".

Now if we actually look at this, it only makes sense for someone who has not done 20 - 25, or more, years in the Reg Force; and they usually don't have a Reg Force Pension anyway.  The question that begs to be asked is:  Does this now mean that 'Annuitants' can now have Full Time Class A/B, B or C employment without the requirement for an 'Annuitant Break'?  If it does, then it should not create much of a problem if the Annuitant has a nice 'nest egg' in the Bank.  If a former CF member on Class A is now expected to give up a Reg Force Pension to contribute to a CF Reserve Pension Plan, then it is a serious kick in the junk.  Currently there are no guarantees to any "Full-time" Class B employment in the Reserves for any reasonable length of time.  Eighty-nine days of Class B employment, with no guarantee or hint of future employment, does not equate to giving up a Reg Force Pension for a pension that will perceivably offer less benefits.

Consequences would be that valuable experience of former Reg Force pers who for whatever reason think of joining the Reserves would be lost.  They will look at this as a loosing proposition.  With the training delta that is occurring in many Trades between the Reg and Res soldiers, this is a very negative plan.  In the Armour Reserve world, for instance, if they can attract former Reg Force Armour soldiers to the Reserve Regt, they will have some of the knowledge avail to pass on to Reservists who have no opportunities for hands on training of equipment they do not possess.  If they have no credible means to attract such experience, the Armour Reserve units will become  (some will argue that they already are) unemployable as armour soldiers if the opportunity arises for them to work in such a capacity with the Reg Force. 

I am convinced that many of these decisions are being made by people who have no idea of what they are ruling on and their main objective, besides cost saving for the government, is more often a very large bonus to their already large pay cheques.

"The Canadian Forces are the armed forces of Her Majesty raised by Canada and consist of one Service called the Canadian Armed Forces."

Thus, while there are the Regular, Reserve and when so constituted the Special Force, it doesn't matter where you serve - it's all the same.


That is part of the legal underpinning.  That is, there is one force that employs you.  Which in turn leads to a question:  How can you be working full time and drawing a pension simultaneously from the same employer?

 

[Remius]

GW:  That's a good point.  Not every type of unit need the benefit of annuitants or ex-reg force personel.  But in the case of units such as armoured, MPs, Medics this could be an issue that dilutes their skill sets and capabilities. 

But I would be curious to see how many of these annuitants are on Class B service with reserve establishments (CBGs, units etc).  My unit has a few ex-regs and their unique skills come in handy at times but none of them work fulltime elsewhere (ie class Bs) and what we get from them can be brought in from outside establishments if requested (mind you that is a hassle and some reserve units are more isolated than others)

My guess is that the bulk are working with reg force establishments.

 

[Bruce Monkhouse]

That is part of the legal underpinning.  That is, there is one force that employs you.  Which in turn leads to a question:  How can you be working full time and drawing a pension simultaneously from the same employer?

I agree with that 100%, you shouldn't be allowed. [working full-time]
There are ways to keep good help to alleviate George's concerns, in the Ontario Govt.we have casuals [on call] who every quarter can earn UP TO the difference of what thier pensions are and what they would have earned working full-time doing the same job they left at.  A great way for retired folks to earn the same money, it helps keeps talent, and nicely fills in holes at peak vacation times.

 

[dapaterson]

GW:  That's a good point.  Not every type of unit need the benefit of annuitants or ex-reg force personel.  But in the case of units such as armoured, MPs, Medics this could be an issue that dilutes their skill sets and capabilities. 

But I would be curious to see how many of these annuitants are on Class B service with reserve establishments (CBGs, units etc).  My unit has a few ex-regs and their unique skills come in handy at times but none of them work fulltime elsewhere (ie class Bs) and what we get from them can be brought in from outside establishments if requested (mind you that is a hassle and some reserve units are more isolated than others)

My guess is that the bulk are working with reg force establishments.

When I looked at such things for the Army, the overwhelming majority of Reg F members transferring to the Reserves went into Reg F establishments on full-time service.

 

[George Wallace]

"The Canadian Forces are the armed forces of Her Majesty raised by Canada and consist of one Service called the Canadian Armed Forces."

Thus, while there are the Regular, Reserve and when so constituted the Special Force, it doesn't matter where you serve - it's all the same.


That is part of the legal underpinning.  That is, there is one force that employs you.  Which in turn leads to a question:  How can you be working full time and drawing a pension simultaneously from the same employer?

Good question.  But is it really ' Full-time ' employment?  Class B employment is currently not really 'Full-time' if it is only for a short period of time -- 89 days.  If one wants to consider that full-time, I would question what their logic is.  Would 'Full-time' also then cover a five day Class B as well......taking us to the ridiculous, but not that far off. 

Also, at 15% less salary than what they made as a Reg Force member, why would that be an incentive to contemplate such a plan?  Are we looking at an equalization in pay for the Reserves with the Regular Force?  I haven't heard of that rumour.

After that question of two pay scales, another question along the lines of "there is one force that employs you" would be "Why then two Pension Plans?" 

Would this also give ALL Reservists the same Medical and Dental benefits as the Regular Force member, or will they still remain ineligible unless hired 'part-time'  > for over 180 days

This whole business is full of holes and a real can of worms.  So many questions -- so few answers.  Are the right questions even being asked of those powers that be?

Crantor

The Ex-Reg Force Class B Reservist I was thinking of, would be the pers that a Reserve Unit would be allowed/is allowed to employ to augment the RSS Staff, not a Class B posn outside the unit in support of a Reg Force unit or formation.  I would include the pers that CBGs are employing in that category as well, as many are hired from the PRL and do not tie down posns in a Res unit.

 

[Remius]

Agreed.  But I still think teh bulk are working full time for reg force esrtablishments.  Mind you I'm seeing from where I stand and may not be a true reflection.

And it does not reflect the amount that are working full time for a reg force establishment but choose to parade actively with a reserve unit.  This is the factor I am more worried about and how it might affect those particular units.

There are so many rumours about the pay differential that I would not be able to even speculate on where that is going.

 

[Bruce Monkhouse]

.............and to put on my Union hat for a second. If there are hours for full-time people than hire somebody fulltime. 

I know nothing of `class` [you know what I mean ] but from all the stuff I've read on this website over the years there must be a boatload of wasted manpower/money on " pay screw-ups/ contract screw-ups/ admin screw-ups" involved with it".  Yet I don't read/see that many with the full-time folks, so maybe that wasted money would be better spent on full-time people? 

 

[dapaterson]

Good question.  But is it really ' Full-time ' employment?  Class B employment is currently not really 'Full-time' if it is only for a short period of time -- 89 days.  If one wants to consider that full-time, I would question what their logic is.  Would 'Full-time' also then cover a five day Class B as well......taking us to the ridiculous, but not that far off. 

"Full time" are the folks who've been on the 330/35 plan since they took FRP in the mid 90s.

Also, at 15% less salary than what they made as a Reg Force member, why would that be an incentive to contemplate such a plan?  Are we looking at an equalization in pay for the Reserves with the Regular Force?  I haven't heard of that rumour.

Until and unless terms of service are fully aligned between Res and Reg that won't happen.  (Though there is also mutterings of holding Reg F members to their TOS - so those on a fixed period of service may no longer be able to play the "post and I release" card - as their reelase will be refused.)

After that question of two pay scales, another question along the lines of "there is one force that employs you" would be "Why then two Pension Plans?" 

There is only one piece of legislation authorizing CF pensions; it is divided into two parts.

Would this also give ALL Reservists the same Medical and Dental benefits as the Regular Force member, or will they still remain ineligible unless hired 'part-time'  > for over 180 days

This whole business is full of holes and a real can of worms.  So many questions -- so few answers.  Are the right questions even being asked of those powers that be?

The can of worms exists because, for years, we've been pretending that the phrase "other than continuing, full-time military service" does not exist in the NDA.  We've got a large workforce that exists (at best) on the margins of the NDA.  The solution is not to continue ignoring the problem.

Crantor

The Ex-Reg Force Class B Reservist I was thinking of, would be the pers that a Reserve Unit would be allowed/is allowed to employ to augment the RSS Staff, not a Class B posn outside the unit in support of a Reg Force unit or formation.  I would include the pers that CBGs are employing in that category as well, as many are hired from the PRL and do not tie down posns in a Res unit.

I suspect that any change would only be going forward, and only for periods of service of a year or more.  So the shorter periods of service (a course, or a brief class B for a specific project, for example) would not be affected.

 

[mariomike]

There are ways to keep good help to alleviate George's concerns, in the Ontario Govt.we have casuals [on call] who every quarter can earn UP TO the difference of what thier pensions are and what they would have earned working full-time doing the same job they left at.  A great way for retired folks to earn the same money, it helps keeps talent, and nicely fills in holes at peak vacation times.

I can't see certain municipal unions ever agreeing to that.
Certainly not Toronto police, fire or EMS.
In 1991, TTC wanted to hire retired TTC drivers for 10 weeks during the summer months to cover vacations and the CNE. There was a ten day strike over it. The union won.

 

[PanaEng]

"The Canadian Forces are the armed forces of Her Majesty raised by Canada and consist of one Service called the Canadian Armed Forces."

Thus, while there are the Regular, Reserve and when so constituted the Special Force, it doesn't matter where you serve - it's all the same.


That is part of the legal underpinning.  That is, there is one force that employs you.  Which in turn leads to a question:  How can you be working full time and drawing a pension simultaneously from the same employer?

We are not employed by the CF or DND.
We are employed by Treasury Board.

Retired CF members have been able to go to work for the PS, DND, RCMP, etc. while collecting their pension. Wouldn't you want to retain that talent?
It is common here in the RCMP; Cpl, Sgt or Insp retires and they come back to work as a TCE (Temp Civ Empl) after a suitable break - collecting their well earned pension and we use their vast experience at a cheaper cost than to fill that position with a Cpl, Sgt, insp or CM.

As for the argument that a civilian company wouldn't pay a pension to an employee if they hired them again, it happens all the time: employee retires; company can't find enough qualified pers to fill the spot/function or the work is not enough to fill a full time spot: employee hired as a consultant, keeps collecting pension.
Y2K problem was a good example of that but there are many more and ongoing situations.

cheers,
Frank