Friday, February 14, 2014

Pensions, a rant

I never thought about pensions when I was young, which was just a month or two ago, or so it seems. If I had been given the choice of having the money deducted off my cheque for a future pension, or having it left for me to spend, I certainly would have chosen to take the money. And so would you. Don't lie to me, you would too.

Now I don't work for that company any more. I don't have a company pension. But Linda does. She's been with the City 30 some years and could retire real soon now. Naturally, her pension is a big concern to her, and me too. Something about buying groceries will do that.

But first, I want to tell a joke. Three guys meet, an investment banker, a trade union worker, and a white collar worker. While the other two of them are introducing themselves, the banker takes 11 of the dozen doughnuts provided for the meeting, and swills most of the coffee. When they sit down, the banker tells the white collar guy, "watch out for that trade union guy, he's going to steal your doughnut."

The one phrase sure to enrage almost anyone these days is "gold-plated pension". Let's talk about this. It's often used by politicians and wealthy corporate hacks to describe the pension that civil servants will get. People like my wife, to be up front about it. People like the firefighter that walks into burning buildings to drag out you or your children. People like cops that deal with scum the rest of us don't want to think about. People that drive the ambulance to take you to the hospital where conditions that would have killed you only a few decades ago are routinely managed. People that take away your garbage, plow and sand your streets, drive the buses, take care of the parks and green spaces, run the plants the provide drinking water and treat sewage. Various inspectors to ensure that safety codes are adhered to for public safety. People that sit in offices and do the paperwork essential to making our complicated society work. People that teach your children. Those and a 1001 other jobs done by people paid by a government with money coming from your taxes.

The wages for these people are often publicly discoverable, at least in broad ranges. One can look up the City of Calgary's union contracts on the internet, complete with wage scales. A quick look, and the highest wage I found was for a journeyman at $41 per hour, or just under 80 K a year. In a province where the oil and gas industry can pay such people much, much more.

I won't go look up the rates of pay for all those other civil servants, but it's pretty fair to say most of them don't get paid that much. Some could only dream of that kind of wage. That's a gross wage, of course, the net is considerably smaller. The pension earned after 30 years service is considerably smaller yet.

The presentation last night stated that the average pension paid to LAPP people is about $14,500 per year (before tax!), and isn't particularly well indexed now. There's many factors that go into pension calculations, and it's easy to make the average be what you want. But let's consider and compare.

The 85 factor. Your age and years of service, when they add to 85, gets you an unreduced pension. When you started, and how much you earned will determine your pension. Some people reach their 85 factor in their early 50's. Some never reach it. Technically, I suppose I could reach it, starting such a job now, and working for about 15 years. Not likely.

Think about someone in their mid to late 50's, for example, reaching their 85 factor and retiring to live on that $14.5 K per year, plus CPP. Some people retire, and die a few years later. Others live out to the average age, now in the low 80's for Canadians. Some will live to see 100 or more. It's a terrible thing to live longer than your money, or live long enough to see inflation ravage it.

So when a $#@! politician tells you that one of the ills of the world is the gold-plated pension of civil servants, you should punch him or her right in the throat, if you can find it underneath their piggy jowls from which the lies emerge. Look at THEIR pensions. Gold-plated is scarcely an adequate word. They work a mere 6 years to become eligible, and the amounts are a huge percent of their annual take.

I could go on about politicians, but that's not the issue. The issue is that the Redford government in Alberta has proposed plundering the modest pensions paid out to ordinary Albertans. They've finally clued in that many of their current work force can retire real soon now. The fiscal reality is that retiree's don't pay as much taxes as working people. They are desperate to keep people working, so they are planning to punish people that retire before 65.

The proposal we've seen takes effect the beginning of 2016, and any pension earned after that gets treated differently. Differently as in huge penalties accrue if you retire before 65. Linda ran the numbers for her, assuming she works only a few years past 2016. The per month numbers don't sound bad, but if she lives to 90, and they cut indexing the way they have proposed, it will cost Linda $100, 000. This was calculated using the Alberta Government calculator.

Say that slowly, one hundred thousand dollars. Is there anyone reading who thinks that's a trivial amount of money for a person's income? Oh, hello Bill, and Mark, I didn't know you read my blog. And this is for someone having only a few years of income exposed to the proposed rules. Now think about your kid, just starting out, happy to get a job with the City because it's more stable than an oil and gas job, even if it doesn't pay as much. 30 years from now, ALL of their so-called pension is exposed to those rules, and it will cost them their retirement, unless they do exceedingly well with other investments.

The LAPP is in a minor deficit at the moment, but they've had the plan analyzed by actuarial experts. They say the plan is on a sound footing, and that the Redford government has no basis for the proposed rule changes. Yesterday, even the government's Auditor General agreed. Many of the trained seals I mean backbenchers, don't know any different. They only eat the dog food given by the premier, and do what they are told in hopes of gaining a cabinet seat.

Well, to get that seat, you need to be elected. Raping hard working people of the pension they have paid for, and been promised, does not seem like a good way of getting elected. The people they are proposing to steal from are the very people most likely to vote. We have the communication tools. One of us, if we stand up, will provide the "Where's the beef?" meme that crumbled the Mulroney government's plan to cut retirement benefits, and will force the Redford government to back down.

Even people that don't have an LAPP or an Alberta pension have a dog in this fight. Why? Because once the governments see that they can gut the pensions for civil servants, they will move on to your plan. The CPP, which all working Canadians pay into. Maybe they'll change the plans that govern the pension at your company, and do you trust them to leave things as is, if changing the rules will save them money? I think we all know how that gets answered.

No matter that almost every cent that gets paid out from any pension gets recirculated back to the economy by people buying groceries and other real world items for daily life. It's far better for our economy to have 100 people circulating 100 dollars, than to have 1 person of of the 100 circulating some of the 100 dollars.

How do we stop it? We have to make a lot of noise. Contact your MLA and tell them in no uncertain terms that voting for this is a ticket to the unemployment line at the next election. Email them. Phone their office. Don't be rude, just tell them to find out the facts, not what Redford and her ilk are spewing. There is a big rally in Edmonton on March 2. Consider going. I guarantee you know people who will be affected by this, and they would be delighted to bring you onto the bus as a guest. Write about it on social media, and any other medium you have access to.

Why does the government want to do this? I don't know for sure, but it's all of a piece with the Harper government destroying Canada. In my more cynical moments, I think it's the rich people that pull Redford's strings that want to sidetrack the money to them, so they can buy a bigger yacht.

Are you or anyone you know living on a pension, or planning to retire on a government pension? What are you going to do about living in retirement?


  1. I loved this. Hubby and I are in much the same position as you and Linda with regards to that "gold plated" (HA!) civil servant pension. And the additional contribution time I have before my retirement will probably only end up being extended again and again until there is nothing left to claim when I am finally allowed to stop working. I am also in a position right now where I feel like I am a bit like a hostage to my pension for the sake of my future.

    1. That extended again and again piece is exactly what we fear. It used to be that government policy was broadly in the interests of Canadians at large. Admittedly, some more than others, but often more targeted to the people most in need. Now they have so much better data they can target and slice up policy, and lie better about it, so as to benefit them and their buddies. We've got to start pushing back.

  2. Thanks for this! I just shared it?

    1. I saw that, thank you! Readership took a little bump up after you did so.


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