Is Gwen, Kaylee Or Real Woman?

[RW]

This is an interesting little feel good pension deficit story:



[Air Canada] surprised observers last week by announcing that its previously ever-widening employee pension plan shortfall, a problem thought to be structural — the airline has roughly the same number of retirees as employees — had been fixed. The fund deficit that had ballooned to as much as $4.4 billion and stood at $3.6 billion less than a year ago, had been erased. In fact, Rovinescu told assembled business people, it has morphed into a modest surplus.



A "four-pronged process" combined to wipe out that deficit in under one year, he said later; reductions in early retirement provisions for some employees, which accounted for $1 billion; the "excellent (investment) fund performance" of 14 per cent; the differential in interest rates over the year; and the revised repayment schedule that Ottawa allowed Air Canada to make to the plan.



- See more at: http://www.montrealgazette.com/business/Canada+eliminated+billion+pension+deficit+under+year/9436565/story.html#sthash.2Lqbljso.dpuf">http://www.montrealgazette.com/business ... bljso.dpuf">http://www.montrealgazette.com/business/Canada+eliminated+billion+pension+deficit+under+year/9436565/story.html#sthash.2Lqbljso.dpuf

[Renee]

Oh believe it woman!



The trouble is, what people call "unions" are a collective of working people who pay taxes.  It also works out that the more money people make, the more income tax they pay (as a general rule) and the more money they spend (which also means they pay more in taxes) which has economic drive.



There needs to be a shift in attitude when it comes to people making decent money or having decent money.  There also needs to be some follow through in thought when it comes to the alternatives.  What does it cost tax payers to have people who don't make much or enough money?

This is union speak for "I'm just like you now hand over your wallet."



We are not talking about private unions we are talking about public worker unions which are funded almost entirely by tax payers. They are a detriment to economic growth because compared to what they take from taxpayers they give very little back in return in overall economic benefit. Ever wonder why some states in the US like Kalifornia and NJ have such high property taxes? Well it's because of the fact that public worker unions are funded entirely thru property tax revenue. In some states retirees can't even stay in their homes because of the tax burden public worker unions such as the teacher's union place on the taxpayer.  Their constant demand for more and more money is given in to with pleasure by the government bargaining agents because it becomes the local and state governments excuse to extort more tax money from the private citizen on a yearly basis. This also benefits the pro union government because meeting the unions contract demands to the letter means that the union will thank them by contributing huge sums of money (which they extort from their membership) to pro-union candidates for reelection. This only benefits the unions and politicians and leaves the taxpayer fucked. This why FDR and George Meany wanted nothing to do with public worker unions. See unlike union bigwigs and todays government leftwing leeches they had a conscience and understood that a public union was a monster that once created would become almost impossible to be rid of and the financial damage they would do would be all at the expense of the tax paying private citizen.

San Jose, California's third-largest city, Stockton, San Bernadino and Vallejo, a much smaller town, and reports that both are facing huge budget problems thanks to the huge cost of public-sector wages and pensions. Such lavish, unsustainable pensions are eating up an increasing percentage of expenditures while these same communities are forced to slash emergency services to pay for them or face bankruptcy.

Sadly that isn't an unusual situation. You will find towns all over the US that face the same reality even if they don't have the guts and good sense to admit it. A lot of towns have resorted to borrowing money to make up the short-fall but towns and cities can only borrow just so much before their credit runs out. After that comes the doubling and tripling of property taxes which equates to mass exodus of residents and a steep rise in home foreclosures.



By their very nature public workers unions can do nothing to improve or grow an ecomomy.

[RW]

Oh and once again, what is actually responsible for pension shortfalls?  Low interest rates you say?



From July 2013

In a massive report, DBRS said that at the end of 2012, the average pension fund had just enough money to cover only 78.3 per cent of the future benefits it would have to pay out, below the 80 per cent level the agency considers "a minimum funding threshold."



...



"Last year was a very rugged year," Kent Wideman, managing director of credit policy at DBRS, said in an interview on CBC's Lang & O'Leary Exchange, "interest rates went down, which is not a good thing for pension plans".



"As long as interest rates remain at current lows, pension deficits will continue to be high", the report says.



"The pension shortfall of $536 billion is massive and will take great effort to eliminate in the absence of changes to the interest rate environment."



...



In the second quarter of 2013, long-term interest rates rose by 70 basis points — 0.7 percentage points — not far from the 150 basis points DBRS says would be needed to get pension plans back in good financial shape.



Wideman admits that given climbing interest rates in the past few weeks, pension plans are looking much better.



http://www.cbc.ca/news/business/many-pension-plans-dangerously-underfunded-report-claims-1.1406105">http://www.cbc.ca/news/business/many-pe ... -1.1406105">http://www.cbc.ca/news/business/many-pension-plans-dangerously-underfunded-report-claims-1.1406105



So what this is saying is if interest rates go up, pension plans will be back on track and your kids and my kids won't be paying squat for retired public sector workers.  So now who do we bitch out for shitty interest rates and poor market performance?  I have a feeling it isn't unions.

[Anonymous]

[

Sadly that isn't an unusual situation. You will find towns all over the US that face the same reality even if they don't have the guts and good sense to admit it. A lot of towns have resorted to borrowing money to make up the short-fall but towns and cities can only borrow just so much before their credit runs out. After that comes the doubling and tripling of property taxes which equates to mass exodus of residents and a steep rise in home foreclosures.



By their very nature public workers unions can do nothing to improve or grow an economy.

There seems to be a growing awareness in Canada that these lavish snivel serpent pensions are not sustainable. What happened to places like Detroit could happen to prosperous Canadian cities like Edmonton too. We have a growing population and lots of work, but also a huge debt thanks to irresponsible leftist city councils.



Public sector workers are going to have to take more responsibility for their own retirements.

[RW]

Actually Shen, they are sustainable.  They are merely market reliant.  Interest rates go down and pension plans run deficits.  Interest rates go up and pension plans run surpluses.  



Can we be a little less myopic on the view of sustainability and just do away with the the lefty bashing rhetoric please? (By "we" I mean you.)

[Anonymous]

Actually Shen, they are sustainable.  They are merely market reliant.  Interest rates go down and pension plans run deficits.  Interest rates go up and pension plans run surpluses.  



Can we be a little less myopic on the view of sustainability and just do away with the the lefty bashing rhetoric please? (By "we" I mean you.)

They are sustainable as long as benefits are reduced and retirement age is pushed later along with increasing the amount the employee is responsible for. It is going up to 50% from 37% in 2017. With enrolments in public sector pension plans growing at twice the rate of growth for private sector employment levels, Canadians could face higher taxes and reduced government services unless action is taken soon. Retired civil servants in Europe and the US are actually having their pensions cut...some as much as 50%.

[Anonymous]

Speaking of unsustainable and lavish snivel serpent pensions, Canada Post is the "poster" child.

We are losing front door mail delivery in Canada, but the big story is why we are losing it.



Pension costs.



That's right, those of us who still get mail to our door will lose this service due to the huge cost of the pensions Canada Post needs to pay out.



This is the big story here — not that we are losing a particular style of mail delivery, but why.



Canada Post has a $6.5 billion hole in its pension plan. That means they owe money to pensioners or current employees that they just don't have and that is a big driver of these cuts.



Anyone upset about losing postal service to their door should be upset at the cost of the pension plans on offer to postal workers, the inability of past negotiators to say no and the bad planning that saw this huge, unfunded liability grow.



This unfunded liability means taxpayers will have to bail out Canada Post, either through service cuts or, if that doesn't work, a bailout down the road.



Unfortunately, Canada Post is not alone.



Across the public sector, lavish pensions, the kind no one in the private sector gets, are putting the future of government services at risk.



The Canadian Federation of Independent Business estimates public-sector pension plans across Canada could be on the hook for as much as $300 billion they do not have.



In the future, we will have more retirees and fewer workers.



Canadians have fewer children than 40 years ago when I was a tot and many of these pension arrangements were becoming solidified.



We also used to have five workers for every one retiree; soon it will be two to one.



We won't have enough money to pay for the pensions promised.



What happens then?



Well, look to Detroit for an idea.



Retirees in Detroit were promised pensions the city could not afford and eventually the city went broke.



The city has slashed services and the retirees who were relying on those pensions now face seeing their monthly payments cut as the city restructures.



We need pension reform in this country before the same thing happens.



It might sound cold to argue that we need to cut pension benefits, but what is more compassionate?



Is it promising what can be paid out so people can plan for their future with some certainty, or promising more than we can afford and then granny's pension is cut in half when she is 75 and no longer able to work to supplement her income?



It also isn't fair to ask private-sector workers, who on average earn less than the civil servants they support through taxes, to also pony up for the very generous pensions they won't get themselves.



Most private-sector workers don't have pension plans, they save on their own — or at least they should.



Those who do have pensions likely have defined contribution plans rather than the defined benefit plans so many government workers have.



In defined contribution you, the worker, put in so many dollars, the employers matches it and the money is invested — by you as your retirement fund.



This is what the feds, the provinces and municipalities should be moving toward and they should do it now before it is too late and granny gets cut off in her golden years.

http://www.torontosun.com/2013/12/12/postal-pension-prop-unfunded-liability-means-canadians-will-have-to-bail-out-canada-post">http://www.torontosun.com/2013/12/12/po ... anada-post">http://www.torontosun.com/2013/12/12/postal-pension-prop-unfunded-liability-means-canadians-will-have-to-bail-out-canada-post

[RW]

Yeah yeah.  And Air Canada turned around a $3.2 billion dollar shortfall in a matter of a few years.  



It doesn't change the fact that pension plans are market and interest rate dependant.  They are going to fluxuate accordingly.  Is that a difficult concept to grasp or at least an indication of where the focus should be on reducing deficits?

[Anonymous]

I don't know, but wouldn't Canada Post's financial problems have to do with less snail mail today?



I know most of our bills and paystubs are delivered electronically.

[Anonymous]

Yeah yeah.  And Air Canada turned around a $3.2 billion dollar shortfall in a matter of a few years.  



It doesn't change the fact that pension plans are market and interest rate dependant.  They are going to fluxuate accordingly.  Is that a difficult concept to grasp or at least an indication of where the focus should be on reducing deficits?

The reversal in pension woes at Air Canada would never have happened if the federal government had not thrown them a lifeline. They also made a number of demands of the airline. Without the move, Air Canada would have been obligated to put in at least $800 million to its underfunded pension next year, a move that surely would have erased the airline's nascent profitability.



Similarly, the only thing that will save Canada Post's huge pension shortfall are the drastic action taken by the feds. It's not magic.



Some public pension plans are managed very well though. Ontario Teachers pension is 11% government contributions, 11% employee and 78% through investments like the Toronto Maple Leafs.

[RW]

Okay, I had a chat with some of my pension folks.



The "deficits" and shortages reported on funds are based on a specific assessment - if a company was to go bankrupt tomorrow, could the find pay all the pension liabilities in full at that very moment.  If the answer is no, then the fund is said to be underfunded.  Now this is all good and well in the private sector but governments aren't going to pack up and have to pay out, so it's not really a relevant indicator.  



The other thing that needs to be pointed out is that in these plans, there is a significant portion of employees' own money invested in these plans.  And yes, the hundreds of billions in these plans have portions invested in Canadian companies themselves.



There is also tax revenue collected on the money received from the pay out of these plans at retirement.



Self managed RRSPs are shown to not be effective retirement plans for the majority and see a higher percentage of personal funds eaten by management fees than is seen in pension plans.  They run huge personal risk where a person could potentially lose a large portion of retirement savings.  Then what?



I hear you folks going on about getting rid of pension plans, but if those who retire have no income and have to rely on the pittance that is CPP, what becomes of those people?  What do we do with poor seniors who are contributing nothing to the economy?

[Obvious Li]

the simple fact of the matter is that public sector defined benefit pensions are simply too generous, are vastly underfunded and require drastic changes.......your pals can talk about interest rates all they want and sure if they are high indefinitely that helps but what happens if we hit extended periods of deflation .....the fact remains there is an ever decreasing pool of contributors and an ever increasing pool of  withdrawers.....there is a point when those two lines cross never to return.....then you get detroit.



ALL Pensions need to be financed equally by the employer and employee....they need to be converted to DC from DB, managed by professional managers, be transferable, be mandatory for ALL workers in canada and be locked in until age 67.....in other words everyone should contribute double to the CPP than they do now and withdraw double or triple upon retirement.

[RW]

See now "underfunded" is just a buzzword when it comes to public sector pension plans as explained above.



We are in an extended deflation - interest rates have been low for years and years.



It took Air Canada very little time to flip a $3+ Billion dollar deficit into a surplus by ending early retirement and some sound investing.  What does that tell you?



You haven't addressed my question about poverty Munday.  Care to?

[Obvious Li]

See now "underfunded" is just a buzzword when it comes to public sector pension plans as explained above.



We are in an extended deflation - interest rates have been low for years and years.



It took Air Canada very little time to flip a $3+ Billion dollar deficit into a surplus by ending early retirement and some sound investing.  What does that tell you?



You haven't addressed my question about poverty Munday.  Care to?

be more specific.....poverty is for the poor///some people are poor as a result of the choices they make.....some are poor because they are lazy....some are poor as a result of physical or mental issues.....this is how it has always been......as a society we are charged to take care of those less fortunate......not the lazy or the stupid



in this country there is no earthly reason for anyone to be truly poor....most all of it is self inflicted.

[RW]

I was specific - retired poor.  Think seniors and the elderly with next to nothing for post retirement benefits.  



I don't know how the hell you righties can ignore reality and chalk everything that happens that results in poverty is just bad personal choices.  You saw this while wanting to slash wages and have people be working poor.  It makes no bloody sense to me.