Richard thank you for your note.
As sole trustee of the plan the Minister did have the right to make the change to inflation indexing. There are very fewer defined benefit plans left in the private sector because of the high and volatile cost. Those few that do would typically have no inflation indexing or indexing dependant on the plans’ finances being healthy.
You are right to say that the possibility of indexing being affected was not well known to retirees. It is even more true that taxpayers, most of whom have no pension plan at all, had no idea that they could suddenly be tapped for $536 million to shore up the funding of the PSSP. That money does not come from a vault. It comes from taxi drivers, IT professionals, doctors and lawyers, retail clerks, the server who passes you your double double at Tim Hortons. You can safely assume that their experience with their own RRSP’s, if they have one, has been much more disappointing than what you have experienced. And yes, the pensioners of the PSSP also pay those taxes.
Good Morning Mr Black
I am sending this to comment on an opinion you expressed in your recent “editorial” in Saturday, January 5,2013 Business Section of the Chronicle Herald page C5, “Province must learn how to stop writing big cheques”.
I agree with you whole heartedly that we must live within our means and be fiscally responsible. However, I do take exception to you congratulating the current government’s legislation in respect to changing indexing of civil service pensions. This change is unfair to both retirees and current employees.
I do see the merits of defined contribution pensions going forward. The NSGEU has also seemed to support this position. Although their position is contrary to the obvious benefit of defined benefit plans. I expect they are concerned because their members pension contributions would rise. However, in my opinion, the value of an indexed pension offsets this cost especially when the province pays half, the contribution is tax deductible and it represents forced savings. I am sure you would welcome a defined benefit pension if you do not already have one.
A useful quote from David Chilton, The Wealthy Barber, at page100 of his recent book “The Wealthy Barber Returns” clearly lays out some of the issue.
“There is a common misconception about defined benefit pension plans that needs to be cleared up. Many Canadians think that employees don’t make any contributions to their DB plans. That is not always the case. Often participants have significant deductions from their pay cheques to help fund their plans. In fact, it could be argued that the employee is even making the employer’s contribution. That sounds nonsensical, but when you think about it , all contributions are really part of the compensation plan, a plan that has to be competitive enough to attract the right employees. Instead of taking all their compensation in current income, the employees
are taking some in the form of a defined-benefit pension. Good move. Tax deductible forced savings.”
The issue for retirees is that the indexing rules were changed retroactively. This is unfair. My own personal situation is that I had already retired and made the decision to retire based in part on an indexed pension. Now I am not so sure I did the right thing. It surprises me that the Province of Nova Scotia can do this since I am fairly certain it would not be allowed in the private sector. Please correct me if I am wrong.
The other galling thing to me is that I chose to work for government even after having opportunities to work in the private sector at a higher income in part because of an indexed pension. I thought my pension was a condition of employment and part of my benefit package. Apparently it may not be.
So when is a deal not a deal?
Your thoughts on this would be much appreciated.
I read your opinion piece in the Herald and I like what you have to say in it. I think we have often been far too quick in recent decades to leap to the conclusion that allegedly job-ready science and technology training is what is needed for economic growth and a better society. It is fairly rare for someone in your position to take a pro-arts position in Nova Scotia particularly when it comes to funding universities.
I also think you are right to suggest that the universities themselves will continue to be hard-pressed to function as they have historically. The cuts have had a wide-ranging impact. I’m concerned
that in the upcoming “rationalization” which is undoubtedly around the corner that the critical liberal arts mandate of the universities will be jeopardized in the fall-out.
Thanks for your contribution.
The time has come for transparency in this province. Far too much about our financial affairs and government operations is being withheld . The subsidies to Universities is but one good example . Where does each university clearly show you their financials and then where does the Dept of Finance show you what they do subsidize . Then you need to show measurements , dollars per student ,dollars per taxpayer , show comparisons to others in the business . If NS is so smart , how come our university tuitions re so high that we loose students to Newfoundland ?? Oh we make more money from a foreign student ? Oh, so it is not what is best for our subsidy it is what is best for the bottom line and the 5700 staff pensions??
When the provincial portion of the HST went from 8% to 10% that was a 25% increase, not 2% (which would have made it 8.16%)
I understand that stating it as 2% is necessary so people will understand it, but it really understates the impact of the 25% increase.
I guess what i’m saying is that Nova Scotian’s have trouble with math – but that is for another article.
Richard thank you for your note.
As sole trustee of the plan the Minister did have the right to make the change to inflation indexing. There are very fewer defined benefit plans left in the private sector because of the high and volatile cost. Those few that do would typically have no inflation indexing or indexing dependant on the plans’ finances being healthy.
You are right to say that the possibility of indexing being affected was not well known to retirees. It is even more true that taxpayers, most of whom have no pension plan at all, had no idea that they could suddenly be tapped for $536 million to shore up the funding of the PSSP. That money does not come from a vault. It comes from taxi drivers, IT professionals, doctors and lawyers, retail clerks, the server who passes you your double double at Tim Hortons. You can safely assume that their experience with their own RRSP’s, if they have one, has been much more disappointing than what you have experienced. And yes, the pensioners of the PSSP also pay those taxes.
Bill Black | January 17, 2013 |
Good Morning Mr Black
I am sending this to comment on an opinion you expressed in your recent “editorial” in Saturday, January 5,2013 Business Section of the Chronicle Herald page C5, “Province must learn how to stop writing big cheques”.
I agree with you whole heartedly that we must live within our means and be fiscally responsible. However, I do take exception to you congratulating the current government’s legislation in respect to changing indexing of civil service pensions. This change is unfair to both retirees and current employees.
I do see the merits of defined contribution pensions going forward. The NSGEU has also seemed to support this position. Although their position is contrary to the obvious benefit of defined benefit plans. I expect they are concerned because their members pension contributions would rise. However, in my opinion, the value of an indexed pension offsets this cost especially when the province pays half, the contribution is tax deductible and it represents forced savings. I am sure you would welcome a defined benefit pension if you do not already have one.
A useful quote from David Chilton, The Wealthy Barber, at page100 of his recent book “The Wealthy Barber Returns” clearly lays out some of the issue.
“There is a common misconception about defined benefit pension plans that needs to be cleared up. Many Canadians think that employees don’t make any contributions to their DB plans. That is not always the case. Often participants have significant deductions from their pay cheques to help fund their plans. In fact, it could be argued that the employee is even making the employer’s contribution. That sounds nonsensical, but when you think about it , all contributions are really part of the compensation plan, a plan that has to be competitive enough to attract the right employees. Instead of taking all their compensation in current income, the employees
are taking some in the form of a defined-benefit pension. Good move. Tax deductible forced savings.”
The issue for retirees is that the indexing rules were changed retroactively. This is unfair. My own personal situation is that I had already retired and made the decision to retire based in part on an indexed pension. Now I am not so sure I did the right thing. It surprises me that the Province of Nova Scotia can do this since I am fairly certain it would not be allowed in the private sector. Please correct me if I am wrong.
The other galling thing to me is that I chose to work for government even after having opportunities to work in the private sector at a higher income in part because of an indexed pension. I thought my pension was a condition of employment and part of my benefit package. Apparently it may not be.
So when is a deal not a deal?
Your thoughts on this would be much appreciated.
Richard O'Brien | January 17, 2013 |
I read your opinion piece in the Herald and I like what you have to say in it. I think we have often been far too quick in recent decades to leap to the conclusion that allegedly job-ready science and technology training is what is needed for economic growth and a better society. It is fairly rare for someone in your position to take a pro-arts position in Nova Scotia particularly when it comes to funding universities.
I also think you are right to suggest that the universities themselves will continue to be hard-pressed to function as they have historically. The cuts have had a wide-ranging impact. I’m concerned
that in the upcoming “rationalization” which is undoubtedly around the corner that the critical liberal arts mandate of the universities will be jeopardized in the fall-out.
Thanks for your contribution.
Michael Corbett | January 14, 2013 |
The time has come for transparency in this province. Far too much about our financial affairs and government operations is being withheld . The subsidies to Universities is but one good example . Where does each university clearly show you their financials and then where does the Dept of Finance show you what they do subsidize . Then you need to show measurements , dollars per student ,dollars per taxpayer , show comparisons to others in the business . If NS is so smart , how come our university tuitions re so high that we loose students to Newfoundland ?? Oh we make more money from a foreign student ? Oh, so it is not what is best for our subsidy it is what is best for the bottom line and the 5700 staff pensions??
ps | January 13, 2013 |
When the provincial portion of the HST went from 8% to 10% that was a 25% increase, not 2% (which would have made it 8.16%)
I understand that stating it as 2% is necessary so people will understand it, but it really understates the impact of the 25% increase.
I guess what i’m saying is that Nova Scotian’s have trouble with math – but that is for another article.
Charles | January 12, 2013 |