Federal Government Will Pocket Billions In Pension Funds (www.readthemaple.com)

submitted 6 months ago by streetfestival@lemmy.ca to c/canada@lemmy.ca

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[-] karlhungus@lemmy.ca 6 points 6 months ago

This all seems like it's part of the plan, and the title is super biased?

However, legislation governing pension funds restricts the size of accumulated surpluses to no more than 125 per cent of the plan’s liabilities.

Just like the govt guarantees the pensions if the fund fails, it can also take excess surpluses. That seems totally reasonable?

I don't get why the union is acting like it's their money when it isn't -- it's a defined benefit?

[-] n2burns@lemmy.ca 5 points 6 months ago* (last edited 6 months ago)

Just like the govt guarantees the pensions if the fund fails, it can also take excess surpluses. That seems totally reasonable?

The government doesn't guarantee the pension if the fund fails, they manage it so it doesn't fail.

EDIT TL;DR That means they're not financially liable to top up the pension, it means they get to decide how the pension returns to a healthy state, potentially by rewriting the contribution rules.

Most of the unions assume this means the next step is the government will stop funding their portion of the contributions instead of sharing the savings with employees. The step after that is if (really, when) the fund becomes unhealthy, the government gets to unilaterally decide how to fix the fund. Sure, they could top up the fund completely out of public revenues, but they could require employees to help top up the fund.

The reason why the unions think this will happen is because it has happened before. Any employee under the PSPP who's been employed for greater than ~15 years (I can't remember the cut off date) makes 35% of the contributions to their pension, with the government making the other 65%. Anyone who's been with the public sector under that cut-off pays 50%. That's because we started this same cycle back in the early 2000's with the government taking the surplus, but not putting the money back when investment returns were low. AFAIK, a similar cycle has happened at least once before that.

[-] karlhungus@lemmy.ca 3 points 6 months ago

The government doesn't guarantee the pension if the fund fails

This is incorrect, emphasis mine:

Funding shortfall The Government of Canada has a legal obligation to pay plan member pension benefits. If the plan becomes underfunded for any reason (for example, higher-than-expected costs, lower-than-expected investment results), the government is required to transfer additional funds into the public service pension plan. This has occurred before, including during the period from 2013 to 2018.

I don't dispute that they've renegotiated contribution rules, I don't know the history of this pension fund that well. Typically these rules are renegotiated with union agreement.

[-] n2burns@lemmy.ca 2 points 6 months ago* (last edited 6 months ago)

This is talking about if the plan cannot pay it's pensions. That's why it starts with:

The Government of Canada has a legal obligation to pay plan member pension benefits.

It's not talking about if actuaries predict a future funding shortfall. In that case, they can change the rules before there's actually a shortfall, as they did in 2012.

I don’t dispute that they’ve renegotiated contribution rules, I don’t know the history of this pension fund that well. Typically these rules are renegotiated with union agreement.

The unions have no input into contribution rules. Any changes are decided unilaterally by the government, as shown in your source (look for "Jobs and Growth Act, 2012").

EDIT You are correct, that the government guarantees the fund if it completely fails. What I meant to say is the government isn't liable to top it up if it's underfunded. My bad on the wording.