On January 19, 2011, NSGEU president Joan Jessome sent the following letter to the editor of the Chronicle Herald in response to an article by Dan Leger. It has yet to be printed.
Halifax (4 Feb. 2011) - The Halifax Chronicle-Herald is refusing to run a letter rebutting inaccuracies in a column by Dan Leger, the newspaper's director of news content and also a prominent columnist.
Joan Jessome, president of the Nova Scotia Government and General Employees Union (NSGEU/NUPGE), submitted the following detailed response to the column two days after it was published on Jan. 17.
I am writing in response to Dan Leger’s column on January 17 entitled “Public-service pensions: too rich for the rest of us?” I have two major problems with his column.
First, it is inaccurate with respect to public service pension plans in general and with respect to the recent changes to the Public Service Superannuation Plan in particular.
Secondly, its focus on simply attacking decent pensions enjoyed by some public employees, ignores the far more pressing important retirement security issue facing our province – the need to ensure fair and decent pensions are available for all workers regardless of whether they work in the public or private sectors.
Firstly, to clarify who has what pension plan coverage, the majority of pension plans for both public and private sector workers in Nova Scotia are defined contribution plans. In fact, as reported by the then Department of Labour and Workforce Development for 2008-09, the majority of pension plans for public sector employees were defined contribution plans (72) compared to19 defined benefit plans.
He says that members of the Public Service Superannuation Plan can retire with a full pension at age 55. This is not true. They can retire with an unreduced pension if they qualify but not a full pension. In fact, the average annual lifetime pension benefit is only approximately $17,000.
In addition, this Plan was affected (like most pension plans) by the 2008-09 downturn in the markets, not by members retiring early. Members have seen their contribution rates increase three times in five years from 2004 to 2009. They now pay among the highest rates in the country at 8.4% below the Yearly Maximum Pensionable Earnings and 10.9% above that level.
Mr. Leger states that the Dexter government topped up the Public Service Superannuation Plan (PSSP) to deal with the plan’s deficit without any matching contributions from employees. This claim is far from reality.
Active and retired members of the Plan contributed $1 billion to help make up the $1.5 billion shortfall in the Plan through a variety of benefit reductions, especially major changes to indexation. From now on, indexation of pension benefits will only be paid if the funded level is at least 100% except for the next five years from January 1, 2011 to December 31, 2015.when it will be guaranteed at 1.25% for each of these years. After that, any shortfall in the PSPP will be made up through contribution rate increases and other possible changes including benefit reductions.
Mr. Leger is also wrong to assert that governments do not top up private-sector pension benefits. Take Registered Retirement Savings Plans (or RRSPs) for example, which Canadian taxpayers subsidized each year through the generous tax deductions provided to RRSP contributors. And who benefits most from this taxpayer subsidy? It’s higher income Canadians. Roughly, one in four RRSP contributors makes over $100,000 a year. Although these high income earners make up less than three percent of all tax filers, they receive about 30% of the roughly $12 billion in tax deductions that Canadian taxpayers pay each year to subsidize their RRSP investment.
Mr. Leger’s article, as well as Mr. Black’s comments, not only fosters resentment towards public employees because they have earned and contributed to a decent pension plan, but diverts attention away from the real pension crisis our province is facing - declining pension coverage. In 2008, only 41% of employed workers in Nova Scotia contributed to pension plans which down from 46% in 1996 according to Statistics Canada.
What we really need is realistic, affordable and effective pension reform in Canada. It’s obvious that we can no longer rely on the private sector to do so, as they have failed miserably in providing Canadians with decent retirement income.
The best way to achieve effective pension reform to benefit all Canadians is through an expansion of the Canada Pension Plan (CPP). Increasingly, expanding CPP is recognized by most governments and pension policy experts as the best solution to providing Canadians with adequate retirement income.
Clearly, with an aging population, much more can and should be done to ensure future buying power for all Canadians and Nova Scotians so that they will not have to live in poverty.
Nova Scotia Government and General Employees Union
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE