Sunday, March 14, 2010

Pension Boosting

The pensions systems is broken. Everyone knows and acknowledges it, except those who have a vested interest in the system and will receive benefits in the millions of dollars from it.

Firstly, there are the law makers. They are the first in line for lucrative taxpayer funded pensions. Former Reform MPs set to collect large pensions.The pensions mentioned here are in the range of $150,000. At age 55 the fair cash value of these pensions are about $2.4 million. Over the course of an estimated 30 years of pension payments the MP's will stand to collect $4.5 million. Many provincial MLA's not wanting to miss the boat have bought a ticket to the gravy train. $800,000 per Lucky MLA

Tell me that one of these guys could go home and tell his wife about pension reform ... "guess what we did in Parliament today". Then he will have to explain what happened to their $4.5 million. It ain't going to happen! 

Next in line are the senior bureaucrats who as management are supposed to protect the interests of taxpayers. They are in a position to makes changes but they too have a large personal vested interest. In fact, they have even implemented juicy rules for themselves to ensure high pension payouts go directly into their pockets. See my last blog where a senior bureaucrat gave himself a juicy pension even though he had stopped working 10 years before. We cannot count on any changes to be implemented at this level.

Finally there is the last level of average public sector employee. They have gotten together to use the political power of their unions to pile onto the taxpayer. This has ensured special rules for them as well. Even the Auditor of Ottawa could not resist the goodies in the cookie jar. $104K payout to City of Ottawa auditor upsets taxpayers
Pension Spiking
One issue that has not gotten much traction in the debate is the issue of pension boosting or spiking, It happens here in Canada but the ones who can do something about it are powerless because it will cost them personally millions of dollars. 

Buy Backs
These are special rules that allow public sector employees to give pensions a good boost by buying additional pension time. This is the rule that the public employee from my last blog used to give himself a juicy gold-plated pension. For just cents on the dollar public servants can boost pensions by hundreds of thousands of dollars using a  Service Buyback Package. This is a standard tool in pension gaming.  

Vacation Time and Sick Day Payouts 
Last year the City of Toronto had a city employee strike. One of the big issues in the strike was the sick pay issue. No one discussed the connection between sick pay and the ultimate impact they have on pensions. The unions fought tooth and nail to keep this benefit. They realized the future impact any changes would have on their pensions.  

Sick-leave bank becomes pivotal issue in Toronto strike 
Pension Calculus Draws New Scrutiny 
City Wants Police Union To Pay More For 'Spiking' - Video  
California takes aim at big pension payouts for public employees 
State must act on county's pension abuse 
Public Pension Plan Targets ‘Spiking,’

For the rank and file members of the public sector this is the easiest way to boost pensions.

Colin Craig of the Canadian Taxpayers Federation, brought my attention to a Winnipeg Overtime and Sick Leave Audit. It shows the boosting that takes place. Of course the report makes no reference to the pensions drivers over this issue or the long term costs.  

Winnipeg Overtime and Sick Leave Audit
Police OT is a pension lode 
Using overtime to increase pensions draws protest 
Overtime an issue in police budget 

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