Set­ting the record straight on pub­lic sec­tor pen­sions

The Compass - - OPINION -

Dear edi­tor,

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,

Lo­cal 7002

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