Pension fund changes causing deep unease

Teresa Wright
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Finance Minister Wes Sheridan

Provincial civil servants and government have agreed to a slight increase in pension contributions, but a sense of deep unease is developing among unions as further pension plan changes go up for discussion.

On Friday, Finance Minister Wes Sheridan announced the pension fund working group made up of government and union representatives agreed to increase pension contributions of both public employees and government by one percentage point.

Sheridan told reporters this will represent an $8 million total yearly increase in contributions to the two provincial pension funds.

CLICK HERE FOR PENSION STATISTICS

But this falls vastly short of the hundreds of millions in pension shortfalls seen in recent years.

“It does not answer (the unfunded liability) at all, Sheridan admitted.

“But what’s more important is we’ve had full collaboration from our unions. We’ve sat with them a number of times and talked about ways in which we can mitigate this... but we’ve got to protect that base. We can’t have further erosion of this pension plan.”

Actuarial reports show P.E.I.’s pension shortfall ballooned to $436 million this year. The province must pay $230 million into the two pension funds over the next 10 years to cover government’s legislated responsibility to keep the funds financed to 90 per cent of their total value.

It’s these kinds of super payments that have prompted government to look at ways to redesign the way pension funds are managed.

Sheridan says it’s not fair for all P.E.I. taxpayers to be on the hook for hundreds of millions in pension losses.

“We can’t continue to go back to the well and ask for supplementary income from everyday taxpayers of Prince Edward Island,” he said.

“A lot of these people do not have a pension themselves and it’s hard for them as a single parent, for instance, to put their hard-earned tax dollars into the pension plan.”

But it’s this kind of rhetoric that has unions concerned.

New UPSE president Debbie Bovyer said a perception exists among many that P.E.I. civil servant pensions are ‘gold-plated.’

“The average pension is about $16,000 a year, which is not a lot of money. Our members aren’t living large when they retire,” she said

That’s why Bovyer says it concerns her to hear comments about taxpayers being on the hook for public service pensions.

She believes government wants to move from the current defined-benefit plan, to a defined contribution plan.

“It’s not the plan that we currently have and it doesn’t have the benefits that are currently being provided,” Bovyer said.

“That’s not a place that we’re looking to go.”

Up until now, talks between government and unions on pension reforms have been positive. But if the benefit model changes, UPSE will not be so cooperative, Bovyer added.

The pension fund working group is scheduled to meet again later this month, where its agenda going forward will be defined.

The union believes further increases in contributions will likely be on the table as well as the reduction of future benefits.

Sheridan said the current one percentage point contribution increase will mean a reduction of approximately $15 per pay cheque for provincial employees.

Organizations: Teachers Superannuation Fund, Civil Service Superannuation Fund

Geographic location: Prince Edward Island

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  • Bertie
    November 19, 2012 - 16:44

    WOW. People can't tell the difference between federal and provincial. And they wonder why they can't get good jobs. And the rest of Canda funds your little welfare plot, and you can't bother to get enough education to understand what you are whining about before you scream things are unfair.

  • reality check
    November 19, 2012 - 16:19

    40% of the current PEI Civil Service are nothing but politically appointed graft-nepotism-cronyism. You do the FOIPP requests - not one of those 40%ers would have a file at the public service commission to show that that won their position based on merit. Furthermore, there are likely minutes from cabinet meetings around the time of their appointment which would show that their name was tossed out there and the premier and minister of the day told the deputy to hire ''so and so''. Here's my solution for the pension shortfall: FIRE the 40%ers who did not win their job based on merit, but based on political/family connections. You remove the dead weight and free up the pension demands. And cut off the pension to the 40%ers politically appointed pensioners milking the system from their condos down in Florida. PEI has about twice as many civil servants anyway. Hire based on merit and offer a salary that is competitive with other provinces and you'll only need half the current workforce. Trust me, I know.

  • Gerry
    November 18, 2012 - 10:44

    @ Are you sure...."Considering the average federal employee on PEI makes $65,000 and the average provincial employee makes $54,000, their pension would clearly dwarf yours." Question is, are you sure; or just spouting off absolutely erroneous information?

  • Civil Servant
    November 18, 2012 - 10:19

    So, can I complain about paying EI dues because I have never been unemployed? Can I now state that I will no longer pay into the Federal Tax Bucket because I am tired of paying for the social services crowd who choose to remain under-educated and under-employed in order to benefit from the monthly $500 plus I pay out in "deductions'? Because I continued my education, paid my student loans in full and had to apply and test for a job here on the Island that I work hard at and continue to prove my work ethic every day (not every provincial government employee enjoys long lunches, early days off and whatever else they are accused of!). There are many ways for the current government to cut costs. First of all, I agree with everyone stating the facts. An MLA who serves 8 years receives double (or triple) in retirement what it will take myself as a civil servant to earn after 30 years of service. So, tell me, how is it that these people can look at MY pension and say we need to start cutting costs / increase my deductions? Another way to cut costs - deputy ministers - examine their purpose, increase their efficiency and start looking at opportunities to not require their rubber stamp just to keep them in the mix. There are enough directors, managers, supervisors, etc to keep these departments running. I see it every day. People of PEI, do not be fooled by the math of this treasury - it is not as clear as they try to make it sound. It is not about the Public Service pension funds - there are many, many other corrupt things happening that need to be looked at.

    • ED GALLANT
      November 18, 2012 - 18:01

      Civil Servant... Good post. I agree with just about everything you say. However, what I have a problem with is the type of pension that you have.i.e. A defined benefit plan. If one wants to have a pension that is guaranteed, one must be willing to fund it. Because of market conditions in the past, there has been a very serious shortfall in the funded amount. If you wish to continue with this plan, you must be ready to up your level of participation in order to make up this shortfall. You cannot expect taxpayers to be the only ones to increase their contributions. Plan holders must do their part or switch to a define contribution type of plan where the pensionable amount is less known. Either way, you are going to have to pay your way.

    • how about
      November 19, 2012 - 15:08

      How about we cut pensions? Everyone's pension. If you didn't save enough, then is sucks to be you. Everyone has an opinion about other people's pensions. Lets just cut everyones, and we can cut that contribution out of our taxes. Let the stupid starve.

  • XComa
    November 18, 2012 - 07:18

    Reduce all their Pays.. Reduce their Pensions and Increase the amount of time they have to put in to qualify for pension.

    • Good Luck
      November 19, 2012 - 12:03

      Good luck with IT. Governments have generally not paid more than industry pay, so it fhe pay is cut many will leave, drivng up the costs. And then the work gets pawned off on government buddy who hires them and rents them back at huge profits. Good luck saving money once a private sector government buddy gets a hold of all the stuff in the tax and health databases.

    • SAP
      November 19, 2012 - 16:23

      I keep hearing how all of these government employees would do better in the private sector, but I don't see many of them leaving. Also, I know there are good people in in public service, but it is a great place people to hide as well, not fair to the taxpayer, or the ones who pick up the slack.

  • John W.A. Curtis
    November 18, 2012 - 05:54

    I support the HST but I don't support the ghiz government using HST revenues to pay for pension shortfalls. Nova Scotia just contracted services out to IBM. I t is time to do the same here on P.E.I. and reduce the Public Civil Service.

    • merge the maritimes
      November 18, 2012 - 10:40

      Or just make PEI a regional municipality within a larger single province of the Maritimes. That would increase the taxbase for public services and chop 25,000 duplicated public sector jobs in this region.

  • SG
    November 17, 2012 - 23:02

    @ Voter: (If people don't start voting strategically and put in a minority Goverment then you will get the same thing after the next election. People on PEI have to smarten up and quick.) I couldn't Agree with you more! But how much would you wager that come next Election Islanders will elect a Majority Gov. again and I also wouldn't be surprised if they elected Robert Ghiz again! If that happens I'm going to join the rest of the Islanders in Alberta and consider PEI a Lost Cause.

  • Gerard
    November 17, 2012 - 21:17

    Don't be fooled pensioners and gov. employees, Wes Sheridan does NOT have a clue as Finance Minister of this small province. There is really, really rough roads ahead for this corrupt Liberal govt..............It just gets worse and worse. I predict that P. E. I. will be out of business within 10 years and there will be nothing for anybody here.

  • alfredd
    November 17, 2012 - 15:51

    tHE SADDEST PART OF THIS GOVERNMENT'S TENURE IS HOW THEY HAVE MANAGED TO SPLIT OUR SOCIETY, --- SETTING NEIGHBOR AGAINST NEIGHBOR WITH THEIR PATRONAGE, AND BAD POLICIES, E.G. PLAN B, HEALTH CARE, PNP, AND HST. WHERE WILL IT END --? WE SO MUCH WE NEED A REAL LEADER--------------

  • dont blame the workers
    November 17, 2012 - 12:31

    Not all the gov pensions were guaranteed. A few years ago they switched them all to guaranteed as a cash grab to try and fix this problem. I pay into a gov pension and have a private one from a ex employer. My other pension plan is always making money. The gov must have their pension dollars invested in the island and thats why its not making money.

  • aiming for the bottom
    November 17, 2012 - 12:21

    Perhaps it's time to recognize that PEI as a jurisdiction should not be a province. A municipality, yes. A province, no. Merge with NB and NS to form a single province with 10,000 civil servants. We don't need 3 provinces in such a small geographic area with 30,000 duplicated civil servants.

  • ScottPEI
    November 17, 2012 - 11:53

    Just some background: public service pensions are not new - they were agreed upon decades ago and ratified by every government since. So this is not a partisan Liberal vs. Conservative situation. the problem is that the type of pension - defined benefit - relies on investments. And as we all know the world is in a recession. Nobody's fault, just the way it is. But of course that means the return on investment by the pension directors is just not there, therefore the government of the day (it just happens to be Liberal at the moment) is required by law to make up the shortfall. As for people whining about public service benefits, another way of thinking about it is: why not push for the same benefits for all Islanders?

  • Robart Gizz
    November 17, 2012 - 11:38

    People,people stop fighting each other and aim your anger at the real crooks.The banks and other money handlers who have been promising returns and growing funds,Meanwhile they have been robbing us all blind,handing the money to the top 1% elete and than sticking us with the bill to bail them out when their lies don't add up and the profits have suddenly dissapeared.Understand that this plan came from the top and nothing we do at our level will change the out come till we stand together and say ENOUGH.

  • Voter
    November 17, 2012 - 11:32

    If people don't start voting strategically and put in a minority Goverment then you will get the same thing after the next election. People on PEI have to smarten up and quick.

  • SG
    November 17, 2012 - 10:08

    How Generous of Islanders to contribute to Gov. Workers pensions while also having to contribute each month to their own Pension Fund while our Gov. is experiencing a Gov. Pension "Short Fall." No wonder people from away see Islanders' as being such caring and compassionate people. Maybe it's time we transfer that caring and compassion to ourselves!

    • Townie
      November 19, 2012 - 07:16

      And how generous of those government workers to work year round for 30 years paying into EI so you can take half the year off or so you can live off of welfare. You scratch my back I'll scratch yours.

  • MEJ
    November 17, 2012 - 10:05

    Just for the record, Civil Servants are taxpayers too!!!

  • Ralph
    November 17, 2012 - 09:53

    I believe liberal government is doing exactly what we need.. keep up the good work and haters dont hate

  • SG
    November 17, 2012 - 09:51

    @Targetman: (I pay into that pension fund at a tune of about $600/month. I pay Medical/Dental at a tune of about $300/month. I may live to the end get a pension of about $11,000) Why are all other Gov employees only required to pay $15 per month? You should have stayed in University you would have saved money If your paying $600. per month pension fund and $300. per month Dental Care for a Total of $900. per month! Why bother working? By the time you go on Pension you'll have paid for your Pension three times! Go on Welfare you'll be in money! HA !

    • Piet Hein
      November 17, 2012 - 14:09

      Targetman, somehow I doubt you are paying close to $1,000 per month for pension and health insurance.

  • mr. nobody
    November 17, 2012 - 09:00

    time to overthrow prince robert the blackheart. take his pension, make him pay back his received salary as restitution, and then lock him up in the hollow, only to be seen once a year for public shaming. THIEVES!!!!!!!!!!!

  • Targetman
    November 17, 2012 - 08:41

    So, I am a Public Servant. I went to University and studied so i could get a good paying job. For those out there pounding away at Public Servants who according to this article are making a fortune but not paying their fare share, check this. I pay into that pension fund at a tune of about $600/month. I pay Medical/Dental at a tune of about $300/month. I may live to the end get a pension of about $11,000 if I live long enough to use it. Some here are whining about Public Servants enjoying cheap dental, etc. Do you pay $300 a month on dental costs? Tired of the Bull is exactly right. MLA's after 2 terms get the full pension, perhaps $32,000 plus. If I work 30 plus years I might get my 11k....seem fair? I don't disagree that it needs to be looked at but lets be fair and look at the whole picture.

    • Great Math
      November 17, 2012 - 09:08

      With fuzzy math like you are giving, I can see how we are in the situation we are in. With public servants like this looking after our province we are in trouble.

    • Cornwall Resident
      November 17, 2012 - 09:43

      As a public servant, I totally agree. It's discouraging to see so many negative comments implying we are pencil pushers or have it "easy" and get a free ride. What would happen if any of these people got admitted to the hospital and my colleagues and I sat around and did nothing like it's implied? Yes, I feel fortunate to have the job I do, it's rewarding in many ways but we're not living the high life by any means and I worry about retirement just like the next guy. My kids have student loans to pay for their education, and yes, we pay a great deal for our "benefits". Retirement?? I couldn't live on 11,000 a year now, let alone in 20 years from now. ". MLA's after 2 terms get the full pension, perhaps $32,000 plus." So wrong. So very, very, wrong.

    • You Sure?
      November 17, 2012 - 11:35

      If you want to talk about what's fair, let's do so. 80% of private sector employees do not have the luxury of a retirement plan through their employer. They are 100% responsible for financing their post-career years. Not that I think employers should be paying for their employees' retirements. You can probably now imagine how I feel about Canadian taxpayers paying for your retirement. Did you earn some kind of special privilege by being chosen for the public sector? No, you didn't. You are represented by labour union that squeezes every last dollar out of ordinary Canadians at a bargaining table where us Canadians don't have a dog in the fight. Governments cave on most demands because they don't have a stake in the bargaining. It's not their money they are doling out so why should they care? It's not like they invested all their money into "company" and want to protect that. When there is a shortfall, they just grab more money to cover it. I would now like to examine your claim of only getting a pension of $11,000 when you retire. If a Canadian federal employee retires after 30 years, they would collect a pension totaling 60% of their salary. Considering the average federal employee on PEI makes $65,000 and the average provincial employee makes $54,000, their pension would clearly dwarf yours. Do you have the much worse of a deal....I doubt it. Do you get 20% of your salary after 30 years...I fully doubt that. Don't come on this forum and complain about your perceived hardships. Nobody feels bad for you. You have a high wage, low work government position with bulletproof job security. But, don't you worry...things will get better.

    • ED GALLANT
      November 17, 2012 - 13:10

      TARGETMAN... There is not a chance in hell that you are paying $600. a momth toward your pension that will return you a pension of $11,000. a year on retirement.(after 30 years service) Your so called $600 a month contribution is at least equaled by the government, making an annual contribution of $14,400. How can you expect anyone to believe either you or the union that represents you. If it were true, I'd be asking for all the union dues back that I paid in. Most private company pensions are defined contribution, not defined benefit, or "gold plated" like civil servants. As the new proposal put forward, a measely 1% increase, or $8 Million, at which the union is having a hissy fit over, it would take 54.5 years just to cover the current deficit of $436 Million Dollars. Surely, as you say, you have a university education, you must also be able to see this. I won't even attempt to deal with your claim about dental care.If the province is running its' finances by your reckoning, no wonder we are in such dire straits.

  • Garth Staples
    November 17, 2012 - 08:14

    Thousands and thousands of Islanders without pensions are already paying premiums for 8600 Public Servants. The Libs just keep knocking on our doors for more. That's liberalism .

    • sentance
      November 17, 2012 - 10:59

      Just like the Conservatives did before them.

    • Reader
      November 18, 2012 - 08:18

      The argument that the other party did it too is about the weakest excuse for mismanagement and general cluelessness that I can think of.

  • Tracey Allen
    November 17, 2012 - 08:13

    As summary - if I understand this correctly..... 1) Government pensions are in deficit of $436 million a year 2) Government employees will put in $8 million a year. 3) Government will put in $230 million over 10 years from tax payers money for the shortfall - or $23 million a year (adding to our $79 million deficit) Shortfall $436 - $8 (employees) - $23 (public funds) = still short $405 million a YEAR Can't see anyone being happy with this....still not enough to fund the pensions and not even by a little more like 93% still short. There is a paradigm shift and I'm guessing no one - government, employees or public will like it but maybe if we take a different approach and embrace the change we can create a new solution to what seems to be a huge problem. Positive colloboration, open minds, and problem solving is what is needed....we all want to retire happy...it just has to be sustainable for everyone.

    • sentance
      November 17, 2012 - 10:58

      You don't understand correctly. The 436 million is the difference between the assets in the plan and the present value of all the future liabilities or payouts earned by members of the plan to date. Over the next fifty years that might involve at a rough guess that would be a bit under 10 million a year.

  • The Facilitator
    November 17, 2012 - 07:53

    It's becoming abundantly clear that the taxpayers of PEI cannot afford to give its civil servants such a generous guaranteed benefit pension plan. It would be nice if we could, however the the costs are unsustainable for a population of 140,000.

  • Cut Back
    November 17, 2012 - 07:22

    Sorry,but as an Island taxpayer I don't feel I should have to pay for a civil servants retirement fund. I find it hard enough to survive now and its nowhere near their salaries.Still too many civil servants in the Island work place wasting Island taxpayers money, besides $16000 a year pension average,I would be more than happy with that as would many low income Islanders

    • mej
      November 17, 2012 - 09:46

      Then hopefully you wont be the one complaining the next time you go to renew your drivers license and you have to wait 2 1/2 hours because there aren't enough civil servants working at the access centre. Or you won't complain when you have to sit in your car for 35 minutes at a time at a construction site, because there are not enough civil servants working on the site. And surely you wont complain when your tax payment doesnt get processed on time because there are not enough civil servants working there. Perhaps you also won't complain when you loved one who is in a nursing home isn't dressed or washed or given their meds on time, because there are not enough civil servantst working.

  • wtf
    November 17, 2012 - 07:16

    If they are so concerned about needing money why not make all gov employees pay their share of medical and dental coverage like most normal people do. They could put that money towards the pensions or other things that are important to all islanders. I believe exculded employees pay nothing.

    • countryflavor
      November 17, 2012 - 09:54

      I don't know what you pay, but as a government employee, Im paying about 200+ per month for my dental and medical coverage.

  • Just a suggestion
    November 17, 2012 - 06:54

    Here is something that has been thrown around among the public and sure would help with this problem. How about changing the rules that would see all MLA's not be able to receive a government pension until they reach the age of 65 and increase the number of years of service to government and the people of PEI they are required to have before becoming eligible to receive said pension.

  • James Mcgoo Lakeside
    November 17, 2012 - 06:04

    Important story and not just for government employees. I do not think the public is not really understanding these discussions. Mr. Sheridan is our elected representative, however active education of taxpayers and employees is required. Based on story details, the $8M annual increase didn't put a dent in the shortfall. The fund is requires at least 30 TIMES this $8M be provided over the next 10 years. Think of this - the amounts can't come from active employees - there are only 8,600. There are aproximately 4,400 employees collecting average pensions of $16,000 - dollars are not coming from them. Taxpayers do not have funds. Like it or not - changes to existing pensions and defined contribution for current employees going forward is at the doorstep. Math doesn't lie. These changes are major components of the ONLY path forward. Wes and this working group should start the road show and begin educating us to new realities. The sooner the better.

  • Tom Paine
    November 17, 2012 - 05:45

    at some point, there won't be enough (especially non-government) taxpayers to pay out the pensions. then what will happen? How do you think future union members will feel about getting less benefits than the retirees?

  • bullwinkle
    November 17, 2012 - 05:42

    This is just a repeat of when the Liberals used the Civil Service to fund their wasteful spending by rolling back salaries in 1994 and broke a legal contract with the union. You can't continue to spend taxpayers money like you have an unlimited supply and ultimately every Islander will pay. HST will garner more tax money so any way you look at it, we will all be paying more taxes and have less money to spend as working individuals. We have a government that doesn't know the meaning of responsible government so it is time for everyone to let them know we have had enough of their wasteful spending. And every Civil Servant needs to beware of what this Government is going to do to your pension and benefits. Support your Union!

  • john h bernard
    November 17, 2012 - 04:44

    This is not my concern, the unions are to blame for always wanting more and thinking that someone else will be there to pay.

  • HOW BOUT THAT
    November 17, 2012 - 04:21

    Funny how it causes unease when it has to do with government payroll people, but its ok for the rest of us

  • Independant
    November 17, 2012 - 01:10

    My god these Fiberals made a mess of this Province. Total disaster for PEI, can someone please say one thing these guys did in 5 years?and we still have 3 years of these guys. Your children and grandchildren have such an uphill to climb, High taxes HST and no job growth , just the same old guys with the same old backroom deals running the province.

  • Tired of the Bull
    November 17, 2012 - 01:08

    The problem with the pension plan Wes, is that all the politicians who serve two terms get a full pension. These people pay into a plan for 35 years and are lucky to get 16,000 a year. Why dont you cut all the MLA pensions that have been milking our province dry for the last 30 years. You would not want to do that because you are about to receive a nice fat pension yourself. Keep sticking it to the little guys.

  • jane
    November 16, 2012 - 23:43

    well there are alot of people on the payroll for the government....that do not a thing its a joke here on P.E.I...

  • Unions are ripping off the taxpayers, as usual
    November 16, 2012 - 23:11

    1. This is NOT the responsibility of taxpayers to fund civil servants' pension plans. We pay their over-inflated salaries for what? The service they give is pathetic, corrupted, pencil pushers. 2. The union will get upset if the "benefit model changes"- too bad, get upset, taxpayers are very upset! "UPSE will not be so cooperative"- ha what a laugh, unions are weak, so much so, they had to join unions together to try to gain some very much needed power. Unions have lost their purpose as they have become corrupt. And what does "not so cooperative" mean-- sounds like striking threats....good...go on strike - a relief for taxpayers. 3. Do what others had to do when this happened due to economic fall out- bad investments-- BAIL, why should taxpayers be on the hook for someone making bad investments, risky investments with their money,,,sue the investors,,,but do not make the taxpayer pay 4. "The average pension is about $16,000 a year, which is not a lot of money" - Well, it would be a lot of money for me who is not retired but just trying to make a living, trying to get jobs to support myself and family. I don't even have 16,000 for my entire pension. Who pays for my pension? Just shows from statements like this that these people are out of touch with the average hard worker and they need to get REAL jobs! Do a hard days work! The unions are as corrupt and sleazy as the government. They are ripping off the taxpayers, another group who are a burden to society. 5. If the gov't and unions go through with getting the taxpayers to pay to subsidize the over-paid and useless civil servants, they will loose as we will go bankrupt, no way you can get that much money from the taxpayers because we just don't have that much to pay in taxes and be expected to live above poverty. You will be putting people on welfare, and others will retaliate by buying only minimal essentials. PEI's economy will go bust, will be worse than the fall on wall street.

  • taxpayer
    November 16, 2012 - 23:11

    Maybe Wes Sheridan would like to hear from the taxpayers here about how we feel about the pension he is going to get and how much he has paid in. I think govenment needs to clean up there own back yard first!

  • wow
    November 16, 2012 - 22:52

    Liberals have never been able to figure it out....first they cut 7.5% and now 15 bucks a pay.....they are such a joke-cut some of the top heavy jobs...the assistants....and assistants of assistants...next election can not come quickly enough!