Additional Info for Pensions

Globe & Mail – How the Rhode Island treasurer slayed her state pension dragon

The Nova Scotia Pension Agency is the administrator for all three plans mentioned here. The agency has an excellent website (novascotiapension.ca) that provides good information on both benefits and funding status. The information taken from there for this report has been simplified to improve readability, which means some of the characterizations are approximate. Readers interested in further details will find the website a worthwhile visit.

This document from the CD Howe Institute shows the comparable status of the federal government’s plans–an even uglier picture.

What happens when you don’t deal with the problem:

For additional reading, have a look at these articles “California’s $500-billion pension time bomb” by David Crane and “Going for Broke in L.A.?” by Tim Rutten as they examine the current affairs and potential damages regarding California’s unfunded pension payouts.

Member’s Manual: Members’ Compensation, Expenses and Constituency Administration from House of Assembly Nova Scotia

2005 Teachers Agreement

Attorney General Report on Public Sector Pensions

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Last week’s article on nurse practitioners prompted diverse responses. Most of them were enthusiastic, but a couple were decidedly dissatisfied.

The article argued that nurse practitioners should not be required by legislation to establish formal relationships with family physicians as a condition of their right to practice. Secondly, it argued that the system should experiment more broadly with letting various health professionals expand their roles.

Those who were positive agreed that nurse practitioners should not have a legislated obligation to link to a family physician. Nurses are regulated by the College of Nursing of Nova Scotia. In the past 15 years there have been 163 proceedings that resulted in reprimands, suspensions, or revocations of license.

One observed that experienced nurses in senior roles are often an important source of development advice for newly minted physicians.

In addition, most of the responders focused on the broader idea of more flexibility in roles for health professionals.

For example, one correspondent describes “a program of Clinical Assistants in Mental Health and Addiction services in the Eastern and Northern zones. The candidates are currently in the initial phase: assessment and training. So far so good, not an overall solution but a big help to an overwhelmed system in these two zones.”

Another idea, widely used elsewhere, is Family Practice Anesthetists. They are fully licensed and certified family physicians who have done one year of extra training. They can handle a lot of the load that would otherwise require anesthetists with several more years of training.

Two correspondents expressed serious concerns. They were not about the explicit issue of what the legislation should require but rather viewed the article as promoting a further deterioration of the status of physicians.

Worries expressed included:

  1. Nurse practitioners take work away from family physicians. They don’t always keep the family physician informed about changes they make to treatments. Delivering care through nurse practitioners is more expensive than through family physicians.
  2. When the family physicians are notified of decisions—say a prescription—by a pharmacist or nurse practitioner, they have to review it for no fee and may be responsible if things go badly.
  3. The article was promoting more power for nurses’ unions who already have too much. Management of the healthcare system is dominated by nurses. Nova Scotian nurses are among the highest paid in the country, while doctors are among the lowest.

Not all of the assertions in the correspondence are accurate.

Nevertheless, there are valid issues.

  1. When a doctor sees a patient, she gets a fee for service. The economic pressure is to get it done as quickly as possible. The time allotment is 15 minutes. A nurse practitioner is paid a salary and has no reason to hurry. He is supposed to spend 30 minutes with each patient, but still gets paid if there are not enough patients to fill the day.
  2. Family physicians in Nova Scotia continue to be poorly paid. The government made some useful interim steps last March, but more needs to be done.
  3. In some of our rural areas, the population is shrinking but the workload is not because those remaining are much older than the provincial average.
  4. Decision-making is still far too concentrated at the top of the NSHA pyramid. A position of Vice President and Chief, Zone Operations has been established, but it will not be filled until June. It is not clear whether or how this will result in downloaded decision making.
  5. When there is an unexpected departure from a small group of practitioners outside of Halifax, be they specialists or family physicians, it takes a long time for a replacement to be found. Given that we are already understaffed in many areas, there is no bench strength.
     
    The added seats at Dalhousie Medical School are welcome, but it takes a long time for them to graduate active practitioners.
  6. Family physicians and many specialists are independent business operators. The province is a contractor, not an employer, and cannot direct them to move to the areas of greatest need. Many feel no responsibility for succession planning. This makes resource planning difficult for health authorities.
  7. Patients and their families view doctors as their core resource. Nurse practitioners and others are viewed as welcome adjuncts, but complaints are focused on the shortage of doctors.

Family physicians are understandably concerned about their pay and working environment. They should view the growing contributions of other health care professionals as part of the solution, not part of the problem.

To make it work, all of the health professions need to understand that collaboration is more than a “nice to have.” And the health authority needs to be much nimbler and more responsive in its decision making.

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Pensions in Crisis

Voters trying to understand the various positions being advocated for the Canada Pension Plan have every reason to be confused.

The initial incarnation of CPP required only 3.6% of pensionable earnings as contributions, and provided benefits to people well before they had been earned. This was eventually repaired in the nineties; otherwise, the plan would have gone broke.

Today’s CPP provides a pension at 65 of up to $12,780, for which employees and employers annually contribute a combined 9.9% of pensionable earnings. It is simple and cost-effective, but even when combined with Old Age Security (OAS) it does not provide an adequate pension.

After fruitless discussions with the federal government, Ontario proposes to go it alone. Details are not yet finalized and the scheduled start is not until 2017, no doubt reflecting a hope that federal policy will change and save them the trouble. Ontario’s plan, mandatory only for those not already in a pension plan, would require a worker to contribute for 40 years in order to receive an unreduced benefit. The only examples provided on the Ontario website are for employees who work the full 40 eligible years.

The Canadian Labour Congress (CLC) has one of the many proposals to increase the existing CPP. The CLC loves to quote a 2014 Nanos survey in which 88% of Canadians support “increasing the benefits Canadians receive through the Canadian Pension Plan.” Of course the survey does not mention the corresponding need for a substantial increase in contributions, nor the 40 year wait for unreduced benefits. (The same survey makes the shocking discovery that most Canadians would like lower taxes.)

The strongest support for improving benefits was from the oldest respondents, who would get only small benefit from the CLC proposal. There is one group who should actively oppose it. Low income workers are typically able to receive the Guaranteed Income Supplement when they retire, in addition to OAS and a small pension from the present CPP program. An increase in CPP will be largely offset by reductions in GIS. This needy group will be paying something for nothing.

As a result, some proposals for reform, otherwise similar to that of the CLC, do not require contributions or provide benefits on earnings below $25,200. These proposals have considerable merit as a cost-effective and comprehensive improvement to retirement savings for Canadians. 

But that virtue will be much clearer to actuaries and economists than to voters. Most Canadians, given a clear and detailed understanding of proposed changes, would be much more tepid in their enthusiasm for a program that takes so long to mature.

Hence, the rather vague communications from the three political parties. One can search their websites in vain for any indication of what they have in mind.

The Conservatives have argued, incorrectly, that CPP contributions are just another tax. Unlike unemployment insurance, the CPP funds have for five decades been operated entirely outside of government accounts and are only used to pay CPP beneficiaries. Having been opposed to any change, the Conservatives now say that they are willing to consult Canadians about a possible optional program.

How that might work is anyone’s guess. It appears to be just creating a different RRSP opportunity. Are there limits on how much can be contributed? Is it optional for employers too? Are contributions locked in until retirement as is the case for the base plan? This “plan” does not offer much.

The Liberals favour a mandatory program. Liberal Critic for Seniors John McCallum points out that changes would require the agreement of two thirds of provinces with two thirds of the population, so an agreement would have to be negotiated. Their position would tilt toward a large amount of excluded earnings to protect low income earners. Good.

More troubling is that they are not committed to adequate funding, which suggests that they might , as happened with the original CPP, cheat young contributors by paying older ones more benefits than their contributions have earned.

The NDP, which might be expected to follow the CLC recommendation, is so far silent about what exactly they have in mind—although it will clearly be a mandatory program. Caucus Press Secretary Greta Levy promises that “The exact figures on CPP will be announced before the election as part of an NDP government’s approach to retirement security.”

So voters actually trying to understand this complex issue don’t have much to work with.

The Conservatives are trying to fog the issue by musing about a no-hoper voluntary plan.

The Liberals appear to prefer a mandatory plan, but have not drawn any lines in the sand about how it must look. They may be willing to consider an irresponsible funding choice, or to be pushed that way by the provinces.

The NDP say they have advocated a CPP expansion for years—as well as strengthening GIS and reverting the age of OAS to 65. This adds to a growing list of expensive promises with no indication of how they are to be paid for.

Today’s CPP plan is appropriately funded and provides a cost-effective but modest portion of retirement funding. A long term reform is possible that would allow that portion to become more substantial.

The Conservatives have no real intention of making any changes. The Liberals and NDP say they do, but if they choose a wrong model they could do more harm than good.

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