Pensions next generational fight
It might be to overstate the case to suggest that Regina will be ground zero in an upcoming war between retiring baby boomers and generations X and Y.
Actually, the problem facing the City of Regina’s badly underfunded employee pension plan is becoming common across North America. It’s unfair to suggest that it’s strictly about the entitlement mindset of a spoiled generation that has come to believe that either future employees, their employers or the stock markets are obligated to care for retired boomers well into their golden years.
After all, few people anticipated the decade-long stagnation of the stock markets. And surely generations X and Y have grown up feeling equally or more entitled, thinking that they are even less obligated to contribute to society than the supposed greedy boomers.
That said, generations X and Y may soon encounter retirement problems of their own because of those stalled investment markets and rising shelter costs greatly outpacing incomes. Housing prices have risen in the range of 80 per cent in the past five years while wages have gone up 10 per cent to 15 per cent. So is it right that future generations should feel obligated to support — at their own expense — the already privileged generations that proceeded them?
This takes us to issues such as the Regina civic pension plan that not only may be highlighting the generational differences but even focusing on the philosophical slant of upcoming generations that are starting to question why their tax dollars should go to supplement “gold-plated” government pension plans.
Certainly many of the problems with the City of Regina’s pension shortfall are specific to this particular plan and have little to do with philosophical overtones. It might be why you’re hearing more about Regina’s plan, which is only about 70 per cent funded, and less about say Saskatoon’s civic pension plan and other pension plans that don’t have quite as much gilding.
For example, experts familiar with Regina’s plan note that it provides extras such as guaranteed cost of living increases, payouts based on contributors’ best three years of earnings rather than best five years, and bridging benefits that encourage people to retire earlier.
Even more problematic in fixing this pension shortfall is that changes have to be agreed upon by the public employers and a union that has the right to veto changes. It is because of this that the city has been putting money toward the plan for the past two years in hopes of forcing a more equitable settlement. While generally referred to as the city employees’ pension plan, this multiple-employer program covers 6,000 current and former civic workers as well as employees of the public library, Regina General Hospital, and non-teaching employees of the Regina Board of Education.
To be fair to those who agreed to this formula back in 1974, no one really anticipated the low interest rates or minimal stock investment returns of the past decade that have contributed to the slow growth of all pension plans. Nor could they have fully anticipated just how long retirees would be living, although retirements at age 55 didn’t help.
And while the penchant of those on the right is to blame this situation on the left, it should be noted that it was NDP politicians such as Wes Robbins in the 1970s who saw the problem with funding definedbenefit plans and pushed for defined-contribution pensions.
While this is problematic for governments of all stripes everywhere — Canada’s federal government and American state and civic governments have similar pension issues — battle lines are being drawn along age demographics and, to some extent, political lines. That public pensions we all pay for are generally more lucrative than private plans is problematic.
And while public pension plans aren’t top-ofmind (we’re not raising taxes to pay for them) they are getting more attention. Consider the furor you are already hearing when people complain that Regina can’t afford a new football stadium because of its pension debt.
Are we sacrificing amenities for future generations because we are overpaying for the amenities of retirees? Talk about something that will ignite generational warfare.
And at issue here is something that goes well beyond Regina’s stadium or its pension plan. What’s at issue is inequity between generations of working people. That’s something that will be sorted out one way or another.