I was just wondering what you think about the approach the Minister took with regard to the PSS Plan in his budget & the related changes put in place through the Financial Measures Act (FMA).
More specifically, what is your feelings about the government of NS retroactively rewriting the employment (compensation arrangements) contracts of 30,000 retired and current public servants. These 30,000 Nova Scotians completed their part of the contract & because of the manner in which the plan benefit changes have been or will be implemented the NS government is reneging on its obligations.
For example, a public servant who worked for the government for 30 years, did so under an emplyment contract that included the following
– annual salary & benefits while employed
– deferred compensation in the form of PSS pension benefits that included the following
– basic pension of 2% per year X the average of the 5 highest years’ income
– the above adjusted annually for CPI up to a max of 6%
– a provincial guarantee that if the fund is not able to pay the earned benefits then the government will provide the funds necessary
Now – one can argue that these are pretty good retirement arrangements compared to what other may or may not have, but the fact can not be ignored that these were legally contracted & earned benefits by the above individual with 30 years of service.
I wonder how bond holders would feel if the government decided to unilaterally reduce the rate of interest they are prepared to pay on NS debt.
Your thoughts please
– on the NS government breaking a contract where the other party has already fulfilled its obligations under that contract?
– and to add insult to injury, the FMA included provisions that eliminated the legal rights of the injured party to sue the government or anybody else for breach of contract.
Claude thank you for the question.
The Minister asserted his right as sole trustee of the plan to make the benefit changes. You may recall that Joan Jessome, who is never reluctant to assert rights contained in a bargaining agreement, was quoted as acknowledging that the Minister had the authority .
Having said that I am sure there are many people like you who did not realize that these kinds of changes could be made. I am not in a position to know how well the possibility was communicated but I do know that most people do not tune into pension issues until sometime after age 50.
Bill
Hi Bill
The following comments are provided “Without Prejudice”.
First…I have been fully aware of the fact that such changes were possible to the PSS. What concerns me – & should concern anybody that does ‘business’ with the government of NS – is that obligations owed for goods & services provided may not be worth the paper they are written on.
It appears many people do not fully understand the facts & background
associated with the PSS plan and the fund itself or what the government has in fact just done.
It is one thing to change benefits being earned prospectively, but quite another to change those already earned retroactively.
I doubt you or any other Nova Scotians would like a past employer to unilaterally decided that they could not afford to compensate you the way they did, and retroactively claw back some part of the compensation or other benefits you earn long ago.
What’s next…unilaterally cutting % rates on PNS debentures? Hey anything is possible.
Next – NSGEU & the bargaining agreements are not relevant to my original question. All PSS retirees & many current active members are not & never have been represented by NSGEU or covered by the related
agreements.
Further, neither is/was relevant to the legal rights & interest of retired public servants to collect their earned retirement benefits.
I would suggest that the Minister as sole trustee, did not have the unilateral right or authority to make benefit changes – otherwise there would have been no need for changes to be made to the PSS Act.
It could be strongly suggested that the sole trustee’s responsibility would have included ensuring that the province (as sponsor of the PSS plan) completely & adequately met & fulfilled its obligations to the retirees & other plan beneficiaries as it relates to those benefits that had already been earned via the provision of pensionable time.
The Financial Measures Act included provisions that were intended to
eliminate/remove the rights of many now private taxpaying citizens of NS to hold the government legally accountable for fulfilling its contract obligations which provides evidence that the government was concerned that what it was doing amounts to breaking the employment contracts it had or has with approx 30,000 Nova Scotians.
The fact is that retired public servants (at all levels) worked for years under an agreed upon employment contract which included the earning/accruing of retirement benefits (including guaranteed indexing and other benefits) that called for them to fulfill their part of the agreement & then the Province would fulfill/complete its obligations under those arrangements.
Next – I agree with you that the communication around the ‘what & the
why’ should have been much more thorough. The reality is, most people
(including those affected directly & MLAs) likely did not fully & adequately appreciate the scope of the changes made (which go well beyond just indexing).
Next – With regard to the $560m extra contribution, it should be noted that each year the government would have been charged interest on the PSS unfunded liability, so if they can borrow at a rate lower than that charged on its PSS obligation, there could actually be a saving realized as it relates to the calculation of the annual surplus of the Province.
Last – Until the real facts behind this ‘transaction’ are known and understood, more fully & broadly I have no desire to have my comments
included in any kind of public forum. I have seen first hand what happens to people who take a position contrary to a governing party or which may not suit the views of those members of the public who feel all current & past public servants are useless, overpaid, etc.
So, now I am back to my original question….do you believe it is OK for the government of NS to renege on paying for goods & services already provided to used by it?
Claude
Thanks Claude.
My view is that the government also has an obligation to taxpayers and that, without violating contractual obligations, it must balance those
interests against those of pension plan beneficiaries.
It is also my view that our democracy is enhanced when people publicly express views that are important but may not be popular with fellow
citizens or the government of the day.
Bill
Thanks Bill….I agree fully…despite my initial concerns about participating in a public debate on the issueClaude
Thank you for all you are doing to generate understanding, dialogue and hopefully some solutions for ensuring key issues such as health care,taxation education and pensions are appropriately addressed by the various levels of government. Issues such as the funding of the current public sector pension deficits are complicated and their consequences are not well understood. I hope by shining your spotlight on thses serious issues it will produce a critical mass of citizens demanding they be fairly and properly addressed. Thanks again for your leadership, it is truly impressive. Keep up the good work
The problem is not clarity or comprehension, the problem is this is a long term structural problem in a business (politics) that is short term. All parties are already in election mode. There is no appetite to tackle any of the real, serious and systemic problems. And sadly, most voters don’t seem to care either.
The public has no idea of the magnitude or impact this deficit will have on their tax burden. The plan has to be changed such that it is not so costly, for example “indexing” doubles the cost of a person’s pension plan. That means, if it cost $500,000 to buy your pension when you retire , it will cost $1,000,000 if you add in the indexing cost. It might be a good idea to break down the component parts of the pension and if a person is adamant about having indexing as part of their plan they pay an extra cost as part of their monthly contribution when they first begin to work or join the plan
It might also be an idea to have the trustees be more accountable for their decisions, in light of the remark you have quoted. If their pensions were tied to the performance of the fund they might be singing a different tune. This is not a guiding principal of a defined benefit plan , so maybe we should change the design to a ”defined contribution plan” , allow people to make their own investment decisions and let the cards fall where they may when you retire. Now the cost to the taxpayer is known and we aren’t going to be stung with a big deficit
Oh yes, where are the triennial actuarial reports for all those past years and what were the trustees doing to make up these deficits that currently exist today
Taxpayers should be indebted to you for bringing & keeping this in front of their noses! This is absolutely outrageous!!! I worked my whole life in private industry and everything I’ve worked for is in the markets!!! Many others are like me – NO Gov’t. indexed, bailed-out pensions, propped out by the taxpayer, for us to depend on!
Over the past 2 years I have seen my portfolio take at least a 35% hit, yet these morons expect ME and every other hard-working taxpayer to BAIL them out so they can continue to enjoy their gold-plated Gov’t. pensions! This province is FLAT BROKE and Dexter & company are finishing the job. With close to a $$$BILLION going every year just to SERVICE the DEBT, what are we leaving behind for future generations! It’s no wonder our young folks are getting the Hell out of here just as soon as they are able and heading west. This province has the HIGHEST of all the BAD things – income taxes, HST, cost of goods, cancer rates, etc., and the LOWEST of all the GOOD things – incomes, infrastructure, facilities, amenities, services, etc.
Thanks very much for taking the time to illustrate the critical importance of understanding the province’s liabilities. I could not agree more that the message has to reach the populace again and again … Nova Scotians have to understand and accept there is no magic political promise that can overcome the financial realities that must be dealt with … we must demand accountability and this will only happen with widespread and continuing media coverage.
you know it becomes more frustrating every day to see and hear how crazy our province is when it comes to having made deals with the devils. Total cost of ownership is a key planning calculation in business and maybe the government should start doing better cost evaluation when they do things that win votes. The “capital” cost of a vote is rather cheap….just a promise most times but when they have to deliver on the promise it becomes a very large ongoing operating cost. O gee then we would have to assume the folks in power or looking to get into power have the province’s real interest in mind vs the status of the party.
It sounds as if going forward this pension plan will need to have greater input from the teachers. One should look at the history which is ripe with nonexistant returns when times were good. If the same group are looking after the pension there is no hope.
Maybe it is time to start a new pension system for the teachers that are in the system now. This will not alievate the situation but it might limit the downside even getting worse based on the passed.
Bill — Your commentary is interesting, incisive and valid. My only concern is that it isn’t getting to the critical mass of Nova Scotians, who will have to “pay the piper” when the music stops.
I would like to suggest that some (if not all) of your commentary should be prepared in a journalistic style and negotiated with the daily newspapers in the province as “op-ed” articles. A different version of these articles could be prepared for weekly & community newspapers.
I have close to 40 years in communications, and have done this repeatedly over the years, and this can have a dramatic impact on the debate.
What you’re doing is valuable, but I am not certain enough people are listening to your message.
This is a serious problem, has the NS
government taken any monies out of
the teachers pension fund over the
years? Ernie
ernie bolivar | January 17, 2011 |
Ernie my understanding is that over $400 million of extra funding has been put in by the taxpayer but none has ever been taken out.
Bill Black
Bill | January 17, 2011 |
I was just wondering what you think about the approach the Minister took with regard to the PSS Plan in his budget & the related changes put in place through the Financial Measures Act (FMA).
More specifically, what is your feelings about the government of NS retroactively rewriting the employment (compensation arrangements) contracts of 30,000 retired and current public servants. These 30,000 Nova Scotians completed their part of the contract & because of the manner in which the plan benefit changes have been or will be implemented the NS government is reneging on its obligations.
For example, a public servant who worked for the government for 30 years, did so under an emplyment contract that included the following
– annual salary & benefits while employed
– deferred compensation in the form of PSS pension benefits that included the following
– basic pension of 2% per year X the average of the 5 highest years’ income
– the above adjusted annually for CPI up to a max of 6%
– a provincial guarantee that if the fund is not able to pay the earned benefits then the government will provide the funds necessary
Now – one can argue that these are pretty good retirement arrangements compared to what other may or may not have, but the fact can not be ignored that these were legally contracted & earned benefits by the above individual with 30 years of service.
I wonder how bond holders would feel if the government decided to unilaterally reduce the rate of interest they are prepared to pay on NS debt.
Your thoughts please
– on the NS government breaking a contract where the other party has already fulfilled its obligations under that contract?
– and to add insult to injury, the FMA included provisions that eliminated the legal rights of the injured party to sue the government or anybody else for breach of contract.
Claude thank you for the question.
The Minister asserted his right as sole trustee of the plan to make the benefit changes. You may recall that Joan Jessome, who is never reluctant to assert rights contained in a bargaining agreement, was quoted as acknowledging that the Minister had the authority .
Having said that I am sure there are many people like you who did not realize that these kinds of changes could be made. I am not in a position to know how well the possibility was communicated but I do know that most people do not tune into pension issues until sometime after age 50.
Bill
Hi Bill
The following comments are provided “Without Prejudice”.
First…I have been fully aware of the fact that such changes were possible to the PSS. What concerns me – & should concern anybody that does ‘business’ with the government of NS – is that obligations owed for goods & services provided may not be worth the paper they are written on.
It appears many people do not fully understand the facts & background
associated with the PSS plan and the fund itself or what the government has in fact just done.
It is one thing to change benefits being earned prospectively, but quite another to change those already earned retroactively.
I doubt you or any other Nova Scotians would like a past employer to unilaterally decided that they could not afford to compensate you the way they did, and retroactively claw back some part of the compensation or other benefits you earn long ago.
What’s next…unilaterally cutting % rates on PNS debentures? Hey anything is possible.
Next – NSGEU & the bargaining agreements are not relevant to my original question. All PSS retirees & many current active members are not & never have been represented by NSGEU or covered by the related
agreements.
Further, neither is/was relevant to the legal rights & interest of retired public servants to collect their earned retirement benefits.
I would suggest that the Minister as sole trustee, did not have the unilateral right or authority to make benefit changes – otherwise there would have been no need for changes to be made to the PSS Act.
It could be strongly suggested that the sole trustee’s responsibility would have included ensuring that the province (as sponsor of the PSS plan) completely & adequately met & fulfilled its obligations to the retirees & other plan beneficiaries as it relates to those benefits that had already been earned via the provision of pensionable time.
The Financial Measures Act included provisions that were intended to
eliminate/remove the rights of many now private taxpaying citizens of NS to hold the government legally accountable for fulfilling its contract obligations which provides evidence that the government was concerned that what it was doing amounts to breaking the employment contracts it had or has with approx 30,000 Nova Scotians.
The fact is that retired public servants (at all levels) worked for years under an agreed upon employment contract which included the earning/accruing of retirement benefits (including guaranteed indexing and other benefits) that called for them to fulfill their part of the agreement & then the Province would fulfill/complete its obligations under those arrangements.
Next – I agree with you that the communication around the ‘what & the
why’ should have been much more thorough. The reality is, most people
(including those affected directly & MLAs) likely did not fully & adequately appreciate the scope of the changes made (which go well beyond just indexing).
Next – With regard to the $560m extra contribution, it should be noted that each year the government would have been charged interest on the PSS unfunded liability, so if they can borrow at a rate lower than that charged on its PSS obligation, there could actually be a saving realized as it relates to the calculation of the annual surplus of the Province.
Last – Until the real facts behind this ‘transaction’ are known and understood, more fully & broadly I have no desire to have my comments
included in any kind of public forum. I have seen first hand what happens to people who take a position contrary to a governing party or which may not suit the views of those members of the public who feel all current & past public servants are useless, overpaid, etc.
So, now I am back to my original question….do you believe it is OK for the government of NS to renege on paying for goods & services already provided to used by it?
Claude
Thanks Claude.
My view is that the government also has an obligation to taxpayers and that, without violating contractual obligations, it must balance those
interests against those of pension plan beneficiaries.
It is also my view that our democracy is enhanced when people publicly express views that are important but may not be popular with fellow
citizens or the government of the day.
Bill
Thanks Bill….I agree fully…despite my initial concerns about participating in a public debate on the issueClaude
Claude Carter | June 11, 2010 |
Thank you for all you are doing to generate understanding, dialogue and hopefully some solutions for ensuring key issues such as health care,taxation education and pensions are appropriately addressed by the various levels of government. Issues such as the funding of the current public sector pension deficits are complicated and their consequences are not well understood. I hope by shining your spotlight on thses serious issues it will produce a critical mass of citizens demanding they be fairly and properly addressed. Thanks again for your leadership, it is truly impressive. Keep up the good work
Bernard Miller | June 10, 2010 |
The problem is not clarity or comprehension, the problem is this is a long term structural problem in a business (politics) that is short term. All parties are already in election mode. There is no appetite to tackle any of the real, serious and systemic problems. And sadly, most voters don’t seem to care either.
Jim Mills | June 10, 2010 |
The public has no idea of the magnitude or impact this deficit will have on their tax burden. The plan has to be changed such that it is not so costly, for example “indexing” doubles the cost of a person’s pension plan. That means, if it cost $500,000 to buy your pension when you retire , it will cost $1,000,000 if you add in the indexing cost. It might be a good idea to break down the component parts of the pension and if a person is adamant about having indexing as part of their plan they pay an extra cost as part of their monthly contribution when they first begin to work or join the plan
It might also be an idea to have the trustees be more accountable for their decisions, in light of the remark you have quoted. If their pensions were tied to the performance of the fund they might be singing a different tune. This is not a guiding principal of a defined benefit plan , so maybe we should change the design to a ”defined contribution plan” , allow people to make their own investment decisions and let the cards fall where they may when you retire. Now the cost to the taxpayer is known and we aren’t going to be stung with a big deficit
Oh yes, where are the triennial actuarial reports for all those past years and what were the trustees doing to make up these deficits that currently exist today
Bob Healy | June 10, 2010 |
Taxpayers should be indebted to you for bringing & keeping this in front of their noses! This is absolutely outrageous!!! I worked my whole life in private industry and everything I’ve worked for is in the markets!!! Many others are like me – NO Gov’t. indexed, bailed-out pensions, propped out by the taxpayer, for us to depend on!
Over the past 2 years I have seen my portfolio take at least a 35% hit, yet these morons expect ME and every other hard-working taxpayer to BAIL them out so they can continue to enjoy their gold-plated Gov’t. pensions! This province is FLAT BROKE and Dexter & company are finishing the job. With close to a $$$BILLION going every year just to SERVICE the DEBT, what are we leaving behind for future generations! It’s no wonder our young folks are getting the Hell out of here just as soon as they are able and heading west. This province has the HIGHEST of all the BAD things – income taxes, HST, cost of goods, cancer rates, etc., and the LOWEST of all the GOOD things – incomes, infrastructure, facilities, amenities, services, etc.
Wendell Wamboldt | June 10, 2010 |
Thanks very much for taking the time to illustrate the critical importance of understanding the province’s liabilities. I could not agree more that the message has to reach the populace again and again … Nova Scotians have to understand and accept there is no magic political promise that can overcome the financial realities that must be dealt with … we must demand accountability and this will only happen with widespread and continuing media coverage.
Thanks again.
Judy Lake | June 9, 2010 |
you know it becomes more frustrating every day to see and hear how crazy our province is when it comes to having made deals with the devils. Total cost of ownership is a key planning calculation in business and maybe the government should start doing better cost evaluation when they do things that win votes. The “capital” cost of a vote is rather cheap….just a promise most times but when they have to deliver on the promise it becomes a very large ongoing operating cost. O gee then we would have to assume the folks in power or looking to get into power have the province’s real interest in mind vs the status of the party.
blair | June 7, 2010 |
It sounds as if going forward this pension plan will need to have greater input from the teachers. One should look at the history which is ripe with nonexistant returns when times were good. If the same group are looking after the pension there is no hope.
Maybe it is time to start a new pension system for the teachers that are in the system now. This will not alievate the situation but it might limit the downside even getting worse based on the passed.
Brian Knight | June 7, 2010 |
Bill — Your commentary is interesting, incisive and valid. My only concern is that it isn’t getting to the critical mass of Nova Scotians, who will have to “pay the piper” when the music stops.
I would like to suggest that some (if not all) of your commentary should be prepared in a journalistic style and negotiated with the daily newspapers in the province as “op-ed” articles. A different version of these articles could be prepared for weekly & community newspapers.
I have close to 40 years in communications, and have done this repeatedly over the years, and this can have a dramatic impact on the debate.
What you’re doing is valuable, but I am not certain enough people are listening to your message.
Best regards and respectfully,
Tim
Tim Dunne | June 7, 2010 |
we need Bill Black to run for the leadership of the PC’s.
Your study of the provinces finances is clear and summarised well. Continue the good work
angus mac lellan | June 7, 2010 |