I am sick and tired of the St. John’s business lobby groups: the Employers’ Council, the Newfoundland Branch of the Canadian Federation of Independent Business and the St. John’s Board or Trade attacking our public service pension plans.
They pretend to be alarmed about the unfunded liability part of the net debt, however, as any business person should understand, this liability is merely a paper figure.
There are no banks collecting interest. On the contrary, the fund collects money from its investments.
The concern is really one of cash flow and has nothing to do with percentage of net debt.
As long as the premiums from employer, employees and investment return is sufficient to pay the pension benefits no additional money needs to come from the taxpayer.
That being said, adjustments from time to time are required mainly due to the fact that for many years, rather than matching employees’ premiums and investing at the high interest rates that were available at that time, successive governments chose to spend both the employees’ premiums and their own premiums on roads, schools and health care.
These funds allowed the governments of the day to carry out the business of governing without having to further increase the debt by borrowing. These roads, schools, etc., were of benefit to all.
Thus it is highly appropriate that government invest part of the Atlantic Accord money to help secure the pension fund.
Sharon Horan, chair of the St. John’s Board of Trade, in her latest attack (“Budget ignored some troubling trends,” The Telegram, April 5) condemns governments for allowing the pension liability to grow and at the same time condemns the same governments for taking action to reduce that liability.
Other historical adjustments have been made. The premium rate was raised from 3.5 per cent to nine per cent of salary about a decade ago.
The Canada Pension benefit payable at age 65 is now clawed back to the provincial pension fund.
Thus, most public service workers who paid Canada Pension premiums for their entire working life will receive little or no benefit from the Canada Pension Plan.
In addition, public service employees have several times agreed to accept wage freezes in order to maintain this pension plan.
If these lobby groups are so concerned about the debt, why haven’t they raised their collective voices about the massive 40-year debt entered into for the Muskrat Falls project and the latest borrowing of an addition $1 billion by the current government in a desperate attempt to regain some of its lost popularity? Is it possible that it is because these groups are the very ones profiting from the contracts and spinoff benefits of government spending?
Unlike the pension liability, this money will have to be paid back with interest to the banks, by us and our children for many years to come.
There exists another pension liability, one that is much worse and much more pressing than that of the public service pension.
That is the one created by the many businesses and corporations that provide either inadequate pension plans or else outright refuse to provide any plan for their employees.
The result is that many seniors retire into poverty.
All of us taxpayers are then forced to have to provide social programs, subsidies and pension income supplements for those retirees.
To use Sharon Horan’s own words, these are taxes which could otherwise go to health care, education and badly needed infrastructure.
This problem has been with us for many years, it is here now, and it will continue well into the future.
It has been caused by businesses and corporations undervaluing their employees.
If they truly value the contribution that their employees make they would not only provide them with livable wages now but also by a pension plan that enables them to live in dignity after retirement and not have the taxpayers forced to pay for their employers’ neglect.
In conclusion then, if these St. John’s business lobby groups are truly concerned about pension liability they should stop attacking the public service pension plans.
Instead, they should look in the mirror and see what a vast liability that they have thrust onto all of us taxpayers by refusing to provide suitable pension plans for their own employees.
Ed Downey writes from Marystown.