Canadian DB pensions plans take a drubbing in 2011

[Fido]

The tears are just flowing out of my computer screen......

[boestar]

Well in all honesty it has been said before. "if it is so bad, why are you still here?" May as well be first in line at Emirates.

Fact of the matter is you have lost nothing until you try to collect it. 5 years down the road the pension could be over funded, you never know. Complaining about it today and worrying about it today only assure you will die early from stress and not be able to enjoy it any way.

It may not be nice to hear but there it is.

Welcome to the NEW millenium.

[mrlupin]

Some reading material for this morning

Europe’s $39 Trillion Pension Threat Grows as Regional Economies Sputter

http://www.bloomberg.com/news/2012-01-11/europe-s-39-trillion-pension-threat-grows-as-regional-economies-sputter.html

Some quotes...

Europe has the highest proportion of people aged over 60 of any region in the world, and that is forecast to rise to almost 35 percent by 2050 from 22 percent in 2009, according to a report from the United Nations. That compares with a global estimate of 22 percent by 2050, up from 11 percent in 2009.

Pension managers and governments are relying on economic growth to safeguard the promises they make. If the euro zone grows too slowly to bolster public and private coffers, the retirement plans may become unaffordable, according to Mercer’s McGuinness.

Royal Dutch Shell Plc (RDSA), Europe’s largest oil company, was the last member of the benchmark FTSE 100 Index to close its defined-benefit pension plan to new entrants when it made the decision last month to do so. The company plans to introduce a fund for new employees next year that makes them responsible for ensuring they have enough to live on in old age.

Governments may have to follow the same path for their own employees as well as increasing the retirement age to at least 70 and possibly 75 to make the pensions affordable, Cowling wrote in an article published in July by Public Service Europe.

[conehead]

The federal Conservative government is considering cutting deeper and faster than originally planned, with Finance Minister Jim Flaherty saying Tuesday some departments could face cuts of more than 10 per cent in the upcoming budget.

The finance minister also acknowledged the government is examining public-sector pensions as part of a broader review of federal spending.

Last year's federal budget and the November economic update projected roughly five per cent reductions to departments over three years as part of the $80-billion spending review — for annual savings of $4 billion by 2014-15.

But the federal government is indicating it's now searching for up to $8 billion in annual savings — a 10 per cent curtailment for departments — that could be implemented sooner than initially envisioned.

In Vancouver on Tuesday for pre-budget consultation meetings, Flaherty told reporters the government is facing some difficult choices as it mulls department cuts and tries to balance the books over the medium term.

"This is hard work. And of course, there can be numbers between five and 10 per cent and some departments can do more than 10 per cent," Flaherty said.

"Different departments will have different results depending on the degree of their involvement in various types of programs and initiatives."

The minister said the depth of the cuts will depend on the services various departments provide to Canadians, and that the government isn't searching for an across-the-board chop.

"It won't be a broad brush across government of everybody gets a five per cent reduction or everybody gets a 10 per cent reduction," he added.

"The reason we don't use a broad brush is it results in quite serious inequities, because some departments, for example HRSDC, human resources, deliver a lot of services to individuals."

Flaherty stressed, however, that no final decisions have been made on cuts to departments.

On the thorny matter of pensions, the minister said the House of Commons Board of Internal Economy, not the government, would deal with any changes to the pension plan for members of Parliament.

He said some progress has been made with public-sector unions on pension reform, but that the broader issue must be examined.

"I think we have to. If one's going to make any sort of intelligent assessment of government spending in Canada, one has to look at the cost of remuneration, including benefits and pensions," he said.

The government's strategic operating review initially was searching for $1 billion in annual reductions for next fiscal year, $2 billion for 2013-14, and $4 billion by 2014-15. Nearly 70 government departments and agencies were required to submit scenarios for a five and 10 per cent reduction to their budgets.

The savings are needed to help eliminate a $31-billion deficit by 2015-16, at the earliest. The first of the cuts is expected to be unveiled in the budget, which likely is to be delivered in February or March.

Government insiders acknowledge there's some pressure to front-load the cuts and to obtain the necessary savings sooner rather than later.

The Treasury Board Department, which is leading the review, says $4 billion is the minimum in savings it expects to find and that the annual reductions could reach $8 billion.

Moreover, officials have backed away from Treasury Board's three-year timeline for finding the savings, sparking concerns the axe could fall more swiftly than was first thought.

"A lot of these decisions are still being finalized and they won't be completed until the budget is ready," said Sean Osmar, press secretary for Treasury Board president Tony Clement.

Asked Tuesday whether cutbacks will be expedited, Flaherty said the government is "looking at what period of time would be appropriate depending on the nature of the program. We'll see."

The finance minister rejected suggestions, however, the government is about to introduce an "austerity" budget, arguing the Conservatives are simply being prudent with taxpayer dollars.

The budget will focus on job creation, economic growth and reducing the deficit, he added, pledging transfers to the provinces and individuals (pensioners and the disabled) will not be touched.

"It is clear to me that this is not the time for dangerous and risky new spending schemes. The most positive contribution the government can do is to maintain Canada's sound economic plan," Flaherty said.

John Gordon, president of the Public Service Alliance of Canada, which represents approximately 150,000 federal public servants, said his members are bracing for the worst.

When the spending review was first announced last year, the government said it was focusing on attrition to find much of the savings, Gordon said.

But PSAC says the warnings of larger-than-expected cuts don't bode well for public servants and the federal programs they deliver to Canadians.

"Where there's smoke, there's fire," Gordon said Tuesday. "I don't think it's out of the realm of possibility for this government."

The planned austerity measures come as the population of the core federal public service soared 34 per cent over the past decade, to 282,955 in 2010 from 211,925 a decade earlier. The expansion of the bureaucracy over that time outpaced population growth by a rate of three to one.

The Conservative government is paying Deloitte Consulting nearly $20 million — almost $90,000 a day — to advise the cabinet and senior officials until the spring on how to find savings to balance the books.

jfekete@postmedia.com

Twitter.com/jasonfekete

© Copyright © Postmedia News

[DEFCON]

Dagger, IFG & LE

Thanks, you’ve all been quite informative.

One point of contention Dagger; I don’t believe that everything wrong with pensions is based in malfeasance. Most of that activity is created at the BOD level and supported by government bureaucrats.