Pension plan needs to be fixed: Marshall

James
James McLeod
Send to a friend

Send this article to a friend.

This year isn't the time to bring your "wish lists" to the provincial government.

Instead, Finance Minister Tom Marshall was more interested in confronting some hard truths in the province's budgetary situation Friday when he kicked of public pre-budget consultations in St. John's.

Public sector pensions were front and centre; Marshall made it clear the government pension's unfunded liability is a serious problem the public needs to think about.

"We're paying down our direct debt, but the unfunded pension liability is going up like $500-$600 million every year," Marshall said.

"It's important that the public address their attention to this particular issue and understand it, and then we have the debate on what we're going to do about it."

The province's defined-benefit pension plan pays a set amount each month to retired public servants.

However, if the pension fund fails to perform well on the stock market, there's a gap between what the government is obligated to pay and the amount of money in the fund.

That unfunded liability has now grown to 66 per cent of the province's net debt.

"A lot of people who don't have workplace pensions are required to pay extra taxes every year to fund up benefits to people who have defined benefits and work in the public sector," Marshall said.

"The question is whether this is sustainable or not, and I'd like to hear what the people of the province have to say."

Several members of the business community, making presentations Friday, were ready to make some suggestions to Marshall on how he could deal with the pensions issue.

"What we're asking for is for the provincial government going forward to do a review of the public sector pension program," said Richard Alexander of the Newfoundland and Labrador Employers' Council.

"The whole world is looking at pension benefits moving forward."

Bradley George, speaking for the Canadian Federation of Independent Business, said that small business owners "can't save for retirement because they are paying for lucrative (benefits) for the civil servants."

Marshall wouldn't make any committents, but indicated that he was open to doing some sort of comprehensive review of public sector pensions.

More broadly, in his opening presentation, Marshall made it clear Friday that 2012 won't be a year for big government spending. Due to oil production shutdowns and the loss of Atlantic Accord payments, the government is forecasting a $490 million deficit.

"A lot of good proposals here," Marshall said at the end of the morning consultation session.

"This may not be the year when a lot of them happen."

jmcleod@thetelegram.com Twitter: TelegramJames

Organizations: Newfoundland and Labrador Employers, Canadian Federation of Independent Business

Geographic location: St. John's

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page

Comments

Comments

Recent comments

  • Bob
    January 15, 2012 - 10:00

    It is very easy to jump on public sector defined pension benefits, isn't it? how quickly some people forget how public sector pensioners bailed this province out of annual recurring deficit budgets during the 80's and 90's....wage freezes and roll backs on negotiated contracts. Also, this and past governments have to take fiscal responsibility for the complete mismanagement of public sector pensions whose contributions were put into the government coffers for education , health, transportation and a myriad of other government services from the 60's until 2002. Small business in this province need also to be reminded that public sector pensions are set upon retirement and never increase. Can you say the same about your profits for the last 30 years????

  • employers' council
    January 15, 2012 - 07:47

    Muskrat Falls will cost $6 Billion after significant study and debate. Unfunded public sector post retirement benefits are currently $5 Billion with almost no debate. Regardless of the reasons, taxpayers will have to come up with that $5 Billion just to secure the current level of benefits provided and promised to our public service. This is a fact. We do not begrudge anyone a great pension. However, we can’t bury our heads in the sand and pretend that our credit card is not maxed out. Pensions are important benefits – so important in fact that they should never get to the point where they are $5 Billion in the hole. A full public debate would look for solutions as to how taxpayers can secure the current retirement promises for public servants without further impacting other areas like health and education. This is a responsible request. It’s not about taking away from the public service it’s about protecting what they already have.

  • baieboy
    January 15, 2012 - 06:58

    Sad whats hapening here. Civil servents/teachers contribute less than 1 years pension & many retire under 50. They have 100s thousands drawn from the plan before they reach 65. Ist a hugh taxpayer funded ponzi scheme & needs to be fixed. The pensioners themselves are in denial as to what the real problem is.

  • public servant
    January 14, 2012 - 21:21

    I also worked for my pension and will retire in a couple of years. The govt. failed to keep the pension fund properly funded and now they are using this for negotiating reasons. Perhaps we should change the generous pensions MHAS are getting including Tom Marshalls . They only have to work a few years and get a pension while the rest of us work for 30-40 years to get less than they do. If they want changes then it should start with Tom Marshalls pension.

  • Now I'm telling the real truth
    January 14, 2012 - 16:00

    So what has he and his gov't cronies been doing for the last 8 years?? Painting a rosy picture and driving the payroll through the roof. Once he has taken care of all his buddies, he all of a sudden gets religion. When did he mention this during the election? Just like muskrat falls, didn't want issues to spoil a perfectly good election.

  • Bill
    January 14, 2012 - 14:33

    Mr. Marshall would have you all to believe that the Government is having to pump in fresh dollars of taxpayers money to pay out the pensions. He is misleading everyone in that the provincial pensions are paid out of the pooled pension fund which is a separate government fund with monies contributed equally by both the employees and the employer. What he fails to mention is that Government has had periods where it has taken a holiday from its share of the premiums, and that Government is paying out the highest king of management fees out of the fund's principal despite the poor showing of the invested monies. His statements are nothing more than an attack on the public service pensioners who collect paltry pensions in comparison to the huge pensions that Minister Marshall and his colleagues will collect once they leave politics.

  • Heather George
    January 14, 2012 - 11:08

    I worked for my little pension,and when I become 65 government claws back a good deal of it. Stop using tax payers money needlessly and our pensions can be left alone. Our pension funds were used years ago by the wise government to build roads etc. If we have to suffer so should government members who only have to get elected twice to get a pension. If our pensions are srewed around with,I cannot wait for the next election.

  • roy
    January 14, 2012 - 10:15

    The reason the pension fund is underfunded is because the Govt didn't put their share into the fund and at the same time took employee contributions and put it into general revenue to the benefit of all newfoundlanders by building roads , schools etc. If it was properly managed there would be a surplus there now. I know of employees who got bonuses and indexing from their pension fund because it was properly managed. The previous govts didn't do this. What about the hundreds the prev. govts gave pensions to who didn't pay one cent into. Yes the pension fund needs to be looked into but open and honestly, which i fear will not happen. The true facts need to come out.

  • Brian Richey
    January 14, 2012 - 10:12

    It's interesting to see how both government and business make it sound like the 'unfunded liability' of the pension plan is the fault of the government employees. Had government, as the employer paid their portion annually, such a shortfall wouldn't have occurred. Don't blame the workers. Everyone should be entitled to an employment pension if they devote a third of their life working for an employer. Not to mention in this day and age, pension portability is essential.

  • Jeremiah
    January 14, 2012 - 10:05

    Here we go, another attack on pensioners. Why doesn't the private sector try and do something positive rather than work so hard trying to destroy a good thin? Every private employer should be obliged to enter into a pension plan for their workers to ensure some degree of peace of mind. In later years. Too much emphasis on profits and not enough on workers!

  • Derrick
    January 14, 2012 - 10:04

    Mr. Marshall is paying off the net debt by not making the pension plan payments, thus the budget is even this year after all the oil money, maybe he should stop trying to hire the whole province and increase productivity.

  • Townie
    January 14, 2012 - 09:27

    Wasn't Marshall's budget last year for a deficit? I guess we can expect a large surplus next fall when he comes out with the truth.

  • Harvey
    January 14, 2012 - 08:58

    Here we go again...projecting a deficit. Do deficits and surpluses tie in with elections? I'd like to know exactly how much money is coming ashore from the oil rigs...then , perhaps, I 'd be in a better position to understand the provincial economic situation. Mr. Marshall, set up some form of a group to look at the waste in government spending.You might be surprised how much you could cut down on the forecasted deficit.