Better targets for a 'short, sharp shock'

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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

Organizations: Taylor's

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Recent comments

  • a business man
    May 19, 2013 - 13:36

    While some MHA's are certainly overpaid, there are some that are highly qualified and that should make more. We need are leaders to be the best of the best. For example, not that I am saying I am the best, but I have a law degree, a MBA, an university degree. I have a successful law practice, and I have investments in various countries that make for me more money than I will need. I beleive that I have a tremendous amount of knowledge and experience that would benefit government. I have considered getting into politics, but it is clear to me that the conflict of interest rules will hinder my investments. In short, I am too selfish to give up the profits that I make to serve our province. In other words, the MHA salary is not enough for someone with my education and experience. I would love to help make our province a better place, but not at the expense of the luxuries that my family has come to enjoy. I will not make my family live with less so I can make the province better. I don't love the province that much. In conclusion, we should appreciate that our MHA's have sacrificed so many opportunities in the private sector to serve the government. they have made sacrifices and choices that many other, including myself, are too selfish to make.

    • Corporate Psycho
      May 20, 2013 - 08:35

      Get over yourself. Most of your posts are offensive. We need people like you to stay far away from any level of politics. Don't go away mad just.....

  • Pierre Neary
    May 14, 2013 - 16:55

    Completely agree.

  • Joan Hiscock
    May 14, 2013 - 11:12

    I totally agree. If we want change start in the house and pay them for what they are worth not what they think they are worth. We have a member just biding his time for the next election so he can retire,because it will be his third term finished and a guaranteed pension. This be along side of his other government pension from his previous employment. Same employer, same cash grab, two pensions there is seriously something wrong with that picture. Smarten up or hit the pavement!

  • Jay
    May 14, 2013 - 09:00

    Well said. Too many MHAs think that they are above the rules, and that they deserve preferential treatment. It seems they think the people are there to serve them rather than the politicians serving the people. Taylor seems to be buying into Dunderdale's position that public employees are responsible for the mess which she has created. Trevor, are you contemplating a return to politics?