CFIB’s report on public pensions ‘mean-spirited’; Anti-HR rant meaningless
CFIB’s report on public pensions ‘mean-spirited’
Editor’s note: The following is an open letter to Catherine Swift, president of the Canadian Federation of Independent Business (CFIB), on a report it issued in January entitled Canada’s Pension Predicament: The Widening Gap Between Public and Private Sector Retirement Trends and Pension Plans
What a surprise. Another mean-spirited and economically illiterate attack on the public sector, one in a series from the CFIB, this time an attack on the pension plans of public-sector employees.
The CFIB issued a report that claims there is a widening gap between the public and private sectors when it comes to pension plans, and that the taxpayer is subsidizing the superior public-sector plans. Even though it’s very hard to take this CFIB report seriously, I do feel it is important to set the record straight.
Public sector workers pay half the cost of their pensions. First, and most obviously, the CFIB report deliberately ignores the key point that public-sector workers pay half the cost of their pension.
Actually, in many cases, public-sector workers paid more than half the cost because governments didn’t actually make a real contribution to the plan, just a book-entry contribution. As well, several governments across the country took contribution holidays in the 1990s when some plans were in a surplus position.
The majority of private-sector pension plans, on the other hand, are not half paid for by the employees; instead the employer bears the full cost.
If one was to deduct the amount public-sector employees themselves pay for their own retirement, the part of public-sector pension plans the employer pays for would provide a maximum pension of 35 per cent of income at the point of retirement. That’s a maximum, after a full 35 years of service. The overwhelming majority would have a pension of substantially less than that.
An employee earning $50,000 a year would receive a maximum pension of only $17,500 a year, if only the employer’s contribution was used. Most employees don’t reach the maximum, but even for those that do, a $17,500 yearly income is pretty paltry.
Inadequate pensions at a time of massive retirements is economic lunacy. Every serious observer of the current scene knows Canada is facing an unprecedented retirement wave as baby boomers reach retirement age. Even the CFIB report acknowledges that.
The most economically perverse thing we could do when we know we have that many people approaching retirement is to weaken our pension system. That is the single thing we could do that would cause the most economic disruption, that would cause the biggest decrease in consumer spending, that would cause the biggest increase in poverty in our population.
Do all these businesses the CFIB claims to have as members understand what damage they will do to their businesses if we force 22 per cent of the population to exist on subsistence pensions?
Does the CFIB not understand the social cost, and taxpayer cost, if that great a percentage of the population is subjected to poverty-level incomes or worse?
The CFIB report does acknowledge one key fact: the percentage of workers covered by any kind of pension plan in Canada is dropping, and many corporations are choosing to transfer the pension risk on to their employees by switching to less beneficial defined contribution plans.
The CFIB implies that the solution to this problem is to cut the benefits of the 20 per cent of the workforce that is in the public sector — bring everyone down to the lowest common denominator. It is of course possible to think of another solution: requiring employers, including the members of CFIB, to accept their responsibility for providing a decent pension.
The report misses the point altogether. The debate in Canada must focus on the real pension crisis. It’s not acceptable for a large segment of corporate Canada to off-load its responsibility onto individual workers for their financial security in retirement. A secure, enjoyable retirement should be the right earned by workers for decades of contributions to one’s community and Canada’s economy.
Larry Brown
Secretary-Treasurer
National Union of Public
and General Employees
Nepean, Ont.
Anti-HR rant meaningless
I am seldom compelled to respond to opinionated articles. In a well-researched article, there is always some truth. Any mature professional must respect the perception of other individuals. But I fail to see any benefit or sense, for any of your readers, by including articles such as the one submitted by Mr. Crescenzo. (“Does HR stand for ‘horrible riting?’, Jan. 15, 2007.) Probably Mr. Crescenzo has spent too much time blogging.
We all seek clear writing. We all wish to communicate effectively. Mr. Crescenzo professes to be a “communications consultant and a seminar leader.” I must say that I am disappointed in his approach or attempt to persuade readers that he is the person to help them achieve a level of perfection.
I have not sent this letter to Mr. Crescenzo. My point is not to respond to someone who obviously needs to re-evaluate his career path, but to share with you that I think that the space in your journal would be better used by printing helpful and constructive articles.
Our human resource managers and I enjoy sharing HR Reporter; or, given that Mr. Crescenzo has such a distaste for acronyms, should you now change it to Human Resources Reporter?
Gary Willett
Director of Human Resources
Acadie-Bathurst Health Authority
Bathurst, N.B.
Editor’s note: The following is an open letter to Catherine Swift, president of the Canadian Federation of Independent Business (CFIB), on a report it issued in January entitled Canada’s Pension Predicament: The Widening Gap Between Public and Private Sector Retirement Trends and Pension Plans
What a surprise. Another mean-spirited and economically illiterate attack on the public sector, one in a series from the CFIB, this time an attack on the pension plans of public-sector employees.
The CFIB issued a report that claims there is a widening gap between the public and private sectors when it comes to pension plans, and that the taxpayer is subsidizing the superior public-sector plans. Even though it’s very hard to take this CFIB report seriously, I do feel it is important to set the record straight.
Public sector workers pay half the cost of their pensions. First, and most obviously, the CFIB report deliberately ignores the key point that public-sector workers pay half the cost of their pension.
Actually, in many cases, public-sector workers paid more than half the cost because governments didn’t actually make a real contribution to the plan, just a book-entry contribution. As well, several governments across the country took contribution holidays in the 1990s when some plans were in a surplus position.
The majority of private-sector pension plans, on the other hand, are not half paid for by the employees; instead the employer bears the full cost.
If one was to deduct the amount public-sector employees themselves pay for their own retirement, the part of public-sector pension plans the employer pays for would provide a maximum pension of 35 per cent of income at the point of retirement. That’s a maximum, after a full 35 years of service. The overwhelming majority would have a pension of substantially less than that.
An employee earning $50,000 a year would receive a maximum pension of only $17,500 a year, if only the employer’s contribution was used. Most employees don’t reach the maximum, but even for those that do, a $17,500 yearly income is pretty paltry.
Inadequate pensions at a time of massive retirements is economic lunacy. Every serious observer of the current scene knows Canada is facing an unprecedented retirement wave as baby boomers reach retirement age. Even the CFIB report acknowledges that.
The most economically perverse thing we could do when we know we have that many people approaching retirement is to weaken our pension system. That is the single thing we could do that would cause the most economic disruption, that would cause the biggest decrease in consumer spending, that would cause the biggest increase in poverty in our population.
Do all these businesses the CFIB claims to have as members understand what damage they will do to their businesses if we force 22 per cent of the population to exist on subsistence pensions?
Does the CFIB not understand the social cost, and taxpayer cost, if that great a percentage of the population is subjected to poverty-level incomes or worse?
The CFIB report does acknowledge one key fact: the percentage of workers covered by any kind of pension plan in Canada is dropping, and many corporations are choosing to transfer the pension risk on to their employees by switching to less beneficial defined contribution plans.
The CFIB implies that the solution to this problem is to cut the benefits of the 20 per cent of the workforce that is in the public sector — bring everyone down to the lowest common denominator. It is of course possible to think of another solution: requiring employers, including the members of CFIB, to accept their responsibility for providing a decent pension.
The report misses the point altogether. The debate in Canada must focus on the real pension crisis. It’s not acceptable for a large segment of corporate Canada to off-load its responsibility onto individual workers for their financial security in retirement. A secure, enjoyable retirement should be the right earned by workers for decades of contributions to one’s community and Canada’s economy.
Larry Brown
Secretary-Treasurer
National Union of Public
and General Employees
Nepean, Ont.
Anti-HR rant meaningless
I am seldom compelled to respond to opinionated articles. In a well-researched article, there is always some truth. Any mature professional must respect the perception of other individuals. But I fail to see any benefit or sense, for any of your readers, by including articles such as the one submitted by Mr. Crescenzo. (“Does HR stand for ‘horrible riting?’, Jan. 15, 2007.) Probably Mr. Crescenzo has spent too much time blogging.
We all seek clear writing. We all wish to communicate effectively. Mr. Crescenzo professes to be a “communications consultant and a seminar leader.” I must say that I am disappointed in his approach or attempt to persuade readers that he is the person to help them achieve a level of perfection.
I have not sent this letter to Mr. Crescenzo. My point is not to respond to someone who obviously needs to re-evaluate his career path, but to share with you that I think that the space in your journal would be better used by printing helpful and constructive articles.
Our human resource managers and I enjoy sharing HR Reporter; or, given that Mr. Crescenzo has such a distaste for acronyms, should you now change it to Human Resources Reporter?
Gary Willett
Director of Human Resources
Acadie-Bathurst Health Authority
Bathurst, N.B.
