In an article titled "Pension plans need a short, sharp shock" on May 7, 2013, Trevor Taylor leads us to believe that the 21 per cent raise that his party gave the public service from 2009 to 2012 was somehow responsible for the shortfall in the public service pension plans.
He neglects to mention that in the four previous years (2004-2008), the public service had received a total pay raise of 0 per cent and the general service had undergone a 28-day strike. Taylor may have thought that 21 per cent over four years was a better pension deficit rationale than 21 per cent over eight years or 2.63 per cent/year.
We should bear in mind that over those eight years the Canadian consumer price index had gone from 104.7 to 121.7, for an average yearly increase of 2.13 per cent which, when we deduct it from the averaged eight-year raise, leaves us with a real raise to the purchasing power of the public service of 0.5 per cent per year.
Long history of pension picking
Taylor does mention the fact the governments back to Smallwood had stripped money from the public service pension plans to fund the building of capital works.
I personally remember Smallwood on TV saying that he was going to take the invested money out of the pension plans, but that he would pay the pensions when they came due out of general revenues.
As Taylor notes, subsequent governments have tried to pay the money back into the plans with the most successful being (that of Danny) Williams. However, the plans have never been fully restored and with Wall Street's negligent crash of the world economy in 2008, the growth investments in these plans was significantly diminished.
Taylor's solution is for the government and the unions to fix the deficit in this round of negotiations.
Not the answer
One is left to wonder how any negotiations would solve the problem unless the unions were to agree to accept decreased benefits for their members who have paid for those benefits over 30 to 40 years.
Changing anything for their newer members will not solve this problem, since the liabilities owed by the current pension plans will still exist.
Perhaps government will fund the pensions out of general revenues as Smallwood promised so many years ago or they could deed the capital assets equivalent to the deficit to the pension plans and pay yearly rental costs sufficient to fund the plans' payouts or they could sue those financial institutions and the rating agencies that caused the 2008 crash for billions of dollars, as some institutions are already doing.
If anything deserves a hard shock, it is not the long-serving, honest and honourable public servants.
Indeed, Taylor may have shown us by personal example one group that certainly deserves a shock and that could be achieved by removing the almost totally unfunded liability of the MHAs' pension plan from the general service pension plan.
P. F. Murphy, St. John's