Friday, July 10, 2009

Pension Problems in Nova Scotia

There was an interesting article about the pensions with city unions being renegotiated. Cities want to negotiate pensions

It will be a very tough challenge. Once given these things are hard to take back. They create a large financial burden on taxpayers and are very generous pensions indeed. This pension plan is in serious financial trouble. Lets hope that the cities will be able to negotiate some reasonable concessions for taxpayers.

At last report the pension fund was short $1.65 Billion to cover the cost of the commitments it had made. This is despite the fact that since its inception it had accumulated more than $2.9 Billion of taxpayers and members money. How long will it take to accumulate this extra $1.65Billion.

The government and pension managers have been aware of his problem for many years. In an attempt to cover the shortfall they have doubled annual contributions into the plan from $75Million in 2004 to $140Million last year and it has not made a dent in the plan's funding.

The plan is hemorrhaging cash very quickly now. There are almost as many on pensions (11,646) than paying into the plan (16,629). There are only 1.42 paying members for every pensioner.

Most members are paying only 8.48% of income into the plan. The taxpayer matches this for a total contribution of 16.96% of income. The CD Howe has estimated that the true cost of these types of pensions is 30% of income. This means contributions are short 13.04% every year. It is a ponzi scheme that has to end one day!

Retirees receive pensions based on the 80 rule. This makes an employee who started employment at age 20 eligible for pension at age 50. Many go on to other jobs while collecting pensions (double dipping). Many of these jobs will be with the same government employer.

As well the taxpayer is on the hook for the Teachers Pension Plan that had $1.5Billion of unfunded liabilities at the end of 2008. Even worse they only had 1.23 working teacher for each pensioner. The taxpayer funded $61Million into this plan last year.
These plans can be seen at: Nova Scotia Pension Agency

Last year taxpayers funded over $70Million into the plan. It is still almost $2Billion short.

The plundering of taxpayer dollars has got to stop

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