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Pension contributions to increase to 50:50

Which pension option would work best for you?

  • Stay with the existing (defined benefits) pension plan

    Votes: 29 70.7%
  • Switch to a defined-contribution pension plan

    Votes: 1 2.4%
  • Completely opt-out and invest my money as I choose

    Votes: 4 9.8%
  • What's a pension?

    Votes: 5 12.2%
  • Other

    Votes: 2 4.9%

  • Total voters
    41

Cardstonkid

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Possibly I am looking from a bias that I can't recognize from my vantage point.

I would suggest that I have a unique insiders view of how a government works, and while I recognize the Alberta government is one of the most bloated and inefficient in Canada, it isn't alone.

The truth is that many, probably most, government employees have no equal in the private sector, since there is no private sector equivalent. We can compare qualifications of those in each work force and determine what pay is received based on their qualifications.  I would bet my pension  ;) that for every geologist, IT specialist and qualified tradesman who works for the government that is paid less than their counterpart in the private sector, I could find 2 government "workers" with a liberal arts degree that could not find a job in the private sector that could even cover their mortgage payment. (I know many do valuable work, and they are important, I am simply stating the obvious about the market value of their skill set.)

I think we have sidelined the thread enough, but back to the original point of this thread, the pension I have is not fair to the taxpayer. It needs to change. It must change, and I suspect in the next 10 years it will change.
 

Remius

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It is changing.  PS workers no longer get a severance when they retire.  They will be paying 50% into their pension and the age of retirement is going to 65 from 60 for anyone who joins from 2013 onward.

If you want to attract talent to the PS you need to offer something to them.  A big incentive is the benefits.  If you take that away you get much enthousiasm for service to the crown.

Someone mentioned ADM Mat.  Responsible for a budget of 9 Billion dollars and makes roughly just under 200 000 a year.  How do you attract someone to man that ship when the private sector offers way more money for comparable work?  Even with the pension and benefits and bonus, the tax payer is getting a deal.

Oh and 42% of jobs in the federal PS are knowledge based.  Basically the largest chunk.  EC, EX, AS, CS.  Except for the CS group the degrees you would find are liberal arts for sure for ECs and AS, but not all AS need degrees.  EX is a mixed pot but many of them have masters degrees, CS is all computer tech.  Looking at all the others you have a variety of degrees and diplomas and others like some of the CR and GT where a degree isn't necessary.  80% of public service workers in the federal government do not have liberal arts degrees.
 

mariomike

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pa471856 said:
In my opinion NOTHING is better than a defined benefits pension.

Especially if it has the 2.33 per cent accrual rate.
 

wesleyd

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MCG said:
The unions traded away the severance pay.
Really?  The quoted CANFORGEN mentions MP pension changes.  Did you read it?
Yes it mentions there retirement age is changing nothing about pension contributions or how much they recieve after they serve, I may be off a bit, seven years. I think they are entitled to 70% pension, and after 3 years they are entitled to a 70,000 severance package.
 

jeffb

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So what does this mean in actual dollar figures? Are we talking dozens, hundreds or thousands of dollars adjustment on our take home pays?
 

dapaterson

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jeffb said:
So what does this mean in actual dollar figures? Are we talking dozens, hundreds or thousands of dollars adjustment on our take home pays?

For a very rough estimate: Look at your total CFSA contributions at the end of this year.  Increase it by half.  At the end state, likely over 5-6 years, that will be the difference.  That's based on the public service, where contributors currently pay about 1/3 and will move to 1/2; the delta between the two is 1/6, which is roughly half of the current 1/3.

Of course, the contributions to the CFSA/PSSA are at two rates, so the actual impact will be greater for those who make more money, and less for those who earn less.  As well, the plan as I understand it is for there to be a common contribution rate for the PSSA and CFSA, to hit 50% for the PSSA; that's good news for miitary members, because the military pension costs more than the PS one - members tend to retire and draw earlier, so the plan costs more.


In my case (in the public service), using the 50% increase estimate, my contributions would grow from a combined rate of 7.2% to 10.9% of my gross earnings.  Assuming it's phased in over 6 years, that would mean a change of about 0.6% per year.
 
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jollyjacktar

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dapaterson said:
Of course, the contributions to the CFSA/PSSA are at two rates, so the actual impact will be greater for those who make more money, and less for those who earn less.  As well, the plan as I understand it is for there to be a common contribution rate for the PSSA and CFSA, to hit 50% for the PSSA; that's good news for miitary members, because the military pension costs more than the PS one - members tend to retire and draw earlier, so the plan costs more.

Scuse, me but I'm feeling rather more thick today than other days.  I take it to mean, (highlighted area) that we in the CF are already closer to the 50% mark already in compairison to the PS, so that we'll not have as far a jump to make for the pain to level out??  :stars:
 

Scoobie Newbie

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No we are paying slightly less compared to those civvies that work in DND. We are around 31% right now I believe.
 

ARMY_101

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jollyjacktar said:
Scuse, me but I'm feeling rather more thick today than other days.  I take it to mean, (highlighted area) that we in the CF are already closer to the 50% mark already in compairison to the PS, so that we'll not have as far a jump to make for the pain to level out??  :stars:

Other way around: we contribute 33%; the public service contributes 36% to their plan. So we're increasing by 17%, whereas they're only seeing an increase of 14%.
 

dapaterson

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Sorry fror my lack of clarity.

Right now, the CF and public service pay the same percentage of their pay into their pension plans:

Up to the Yearly Maximum Pensionable Earnings (YMPE), it's 6.2%; above that, it's 8.6%.

However, the military plan permits earlier retirement, so it costs more to pay out benefits.  Costs more = a 50/50 split would mean higher contribution rates than the public service.

So, assuming rates stay the same in the future, if the public service is used for the benchmark to reach a 50/50 split, CF rates will remain slightly below 50%.
 

2010newbie

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dapaterson said:
So, assuming rates stay the same in the future, if the public service is used for the benchmark to reach a 50/50 split, CF rates will remain slightly below 50%.

The CANFORGEN states that the contribution rates will increase over the next few years, so regardless of what way you want to slice it, the member will be paying more than they are now until they are paying 50% of the contribution towards the defined benefit plan. If they maintained current member contribution rates and decreased the gov't contribution, then the benefits received in the future would have to decrease.

 

kratz

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Increased pension contributions + a likely reduced or even frozen pay increase for the next for years, = the 2010s equivalent of the dark days of the 1990s. The only part we are missing in the FRP, wait for it.
 
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jollyjacktar

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Oh yeah deja vu, it's the end times all over again.  If they were so foolish to offer an FRP like the first one, they'd have mass casuaties from the slow ones being run over in the rush to the exits.

 

PMedMoe

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jollyjacktar said:
Oh yeah deja vu, it's the end times all over again.  If they were so foolish to offer an FRP like the first one, they'd have mass casuaties from the slow ones being run over in the rush to the exits.

:nod:
 

brihard

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jollyjacktar said:
Oh yeah deja vu, it's the end times all over again.  If they were so foolish to offer an FRP like the first one, they'd have mass casuaties from the slow ones being run over in the rush to the exits.

I'm not worried. An FRP won't happen, not when we're early into what will be a decade and a half of mass retirements.

It's not exactly an amazing job market out there at the moment.
 
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jollyjacktar

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Brihard said:
I'm not worried. An FRP won't happen, not when we're early into what will be a decade and a half of mass retirements.

It's not exactly an amazing job market out there at the moment.

No, I don't believe there'll be an FRP either.  They learned their lessons last time.  Shame, that.
 

MJP

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Sheep Dog AT said:
FRP was what?
Lesson was what?

Force Reduction Plan.  Essentially the Govt offered buyouts to folks to reduce the number of CF personnel.  It took a tremendous amount of institutional knowledge out of the CF that some argue took years to recover from. 
 
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jollyjacktar

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Sheep Dog AT said:
FRP was what?
Lesson was what?

In my old trade it was hoped that they might see 100-120 of the dead wood take the golden handshake (FRP).  To their horror, the dead wood didn't take the bait because they mostly knew they could not find good jobs easily in the real world.  What happened, was upwards of 450+ people applied and were subsequently released.  The vast majority were the really good people they could not afford to lose.  It was a body blow that hurt them badly.  That, was the lesson.
 
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