Setting the record straight on public sector pensions
On Sept. 13, 2010, the Pensioners Coalition launched its communications campaign to take our concerns directly to the people of Newfoundland and Labrador.
Much has been said about public sector pensions; some of it factual, some of it false. I would like to set the record straight on a few of these issues.
Many people seem to accept the myth that pensions are paid out of the public purse. The opposite is true. Pensions come from the Pooled Pension Fund which pensioners paid into during their working lives.
Since the government only partially met its obligations to match contributions, therein lies the cause of much of the underfunding.
Monies in this fund are used to pay the pensions of retired workers; not tax revenue. To make a long story short, workers paid for the pensions they receive when they retire.
Many people do not realize that pensioners — rather than the public — pay for all of the costs of the Pensions Administration.
The 2010/2011 Estimates of Government show that all the salaries, benefits, transport, professional and purchased services and furnishings and equipment of the public employees of the Pension’s Division are budgeted at $2,694,700.00. That is paid for by revenue (Pension Pool contribution) of $2,694,700.00.
This means that the taxpayers pay zero dollars for all the costs of managing our pensions.
People assume that the government is best qualified to manage our pension funds. As trustee, the minister of finance is responsible for the Pooled Pension Fund. A pensions investment committee oversees the plan’s investments. This committee is assisted by a team of investment consultants.
Workers and pensioners have a major problem with the plan in that, although they own the pooled pension fund, they have very little say how the money is invested or managed. The Government controls all aspects and as a result it is subject to the dictates of politicians, who show very little respect for the retirees or their organizations.
We already know that we pay over two and a half million dollars for the pension division. What other costs are associated with our pension funds? We realize that investment advisors charge fees, but how much do we pay? We realize that investment companies charge commissions, but how much do we pay?
Everyone assumes that that there is not enough money to earn sufficient revenue to pay for indexing and other enhancements.
The government acquires the services of actuaries to determine what the revenues and liabilities are for the pension funds.
These professionals work on the basis of what funds are available. However, are they ever asked to start on the basis of what funds should be available if we include funds that were appropriated by previous governments into general revenue rather than pension funds; if we included funds that would have been there if there had been no “pension holidays” when previous governments did not pay their share; or if we included funds that should have been paid when salaries were froze?
The answers to those questions are not available and we do not know, even though we should, because it was our money that was invested.
Finally, the government completely controls all information. Meanwhile, many pensioners are finding that they are falling further behind in their incomes and as a result are finding it much harder to meet their daily requirements of living.
It is time, Premier Williams, to sit down with the stakeholders and try to show retirees the respect and the dignity they deserve by discussing our concerns in a meaningful way.
Ralph Morris president, NAPE Retirees,