The Public Pension AlbatrossTrevor Parry
As we send our children off to a new school year and attack our jobs with renewed vigor let us consider in the spirit of this past Labour Day just what some of the things organized labour has brought our society. I don’t think there are many, including conservatives like myself that do not recognize that organized labour has been instrumental in creating superior working conditions for a vast portion of the working population, and that the trade union movement today has helped maintain a stable middle class; however when we look to the future some of the gifts that organized labour has foisted upon the taxpayer constitute a series of ticking time bombs.
As someone who works in the pension field, helping business owners and professionals establish tidy retirement nest eggs insulated from that perennial tempest known as the business cycle I consider the looming pension liability, particularly those attributed to the bureaucracy as the single greatest threat to our future economic prosperity. For it is in the “civil” service that the great pension dinosaur, the Defined Benefit plan, still enjoys near sacred status. New graduates, rather than accepting the challenge of risk, and the hopeful consequence of success race to apply to join the legion of the bureaucracy. Meanwhile the average Canadian, middle or working class, cannot look forward to any measure of security in retirement.
When one considers that our hard earned tax dollars are largely earmarked not for delivering services, but rather, bloated salary and benefit costs it is time for us taxpayers to demand more from our elected leaders and policy makers. While I am not advocating reneging on promises made to bureaucrats who have been part of the system for years; I am saying that such pension promises must end for a great portion of the civil service. Policy must be fair, but it must have the future prosperity of our country as its central goal.
Public service unions will point out how hard there membership works, and that politicians enjoy superior pension promises than the rank and file. The former claim has some truth to it, and the latter should have little bearing on the overall problem. Politicians should not enjoy such gold plated programs, but even the total termination of all retirement programs for parliamentarians would not even dent the monolith of future pension liability.
The Harper government will hopefully reach its fiscal goal of balancing our budget by 2015, but how soon after will the fear of pension liability become a reality and force us back into budgetary deficits? All levels of government must therefore move in concert and with all due alacrity. Policy makers should immediately demand higher employee contributions to those who are “grandfathered” in existing DB plans, but this must apply to new Defined Contribution plans too. If retirement savings is a national goal, it must be sustainable. One portion of the population cannot be asked to sign a blank cheque for another segment. The fortress of public service pension plans must be assaulted, and the public service unions made to yield to common sense and shared national interest.
If our society embraces prosperity again, rediscovers initiative and risk taking as a virtue and adopts personal financial discipline then, in time, perhaps a generation, we can once again look at the defined benefit plan; however in 2012 this fiscal albatross must be extinguished.
Posted: September 4th, 2012 under General.