The issue of public sector pension plans is back in the headlines with
the recent election. Several defeated MPs are now entitled to their
"gold-plated Pension plans". As a public sector civil-servant, I wish
to chime in with my two cents:
Many in the private sector
complain that they don't have pension plans, like those in the public
service. Many in the public service have "defined benefit" pension
plans (a guarenteed, indexed retirement income) as opposed to a "defined
contribution" (the value of the plan is what you all you get), which
are common for those in the private sector who are lucky enough to even
have a pension plan.
Some companies, like one that I worked for
when I was in the private sector, sponsor RRSP plans, where the
employer will match what ever the employee contributes.
public sector workers generally have very good job security, salaries,
defined benefit pensions and annual wage increases, but we're not all
getting rich. The way I see it, having the perks I just mentioned are
the trade off for the potential of making big salaries in the private
sector, which is one of the reasons I decided to go into government
work. Besides, I pay a percentage of my gross salary into the pension
plan, along with my employer also paying their required share.
face it, in the private sector, when times are good, times are REALLY
good. At some private companies, an employee's year end bonus can equal
to more than 3 - 6 months salary for me (JUST their year end BONUS).
Now I do realize that private companies can do what they want with
private money, and these extravagant bonuses are the reason some
companies are in trouble now (the auto manufacturers), but my point
still stands. A police officer doesn't get a commission on the number
of traffic tickets they write or on the number of arrests they make, but
a talented salesperson can often make big money, either though
commissions or sales bonuses, for being a top seller at their company.
keep hearing in the media about private sector workers who make
six-figure salaries. If these people don't have a company pension plan,
I feel compelled to ask this question: how much of your net income are
you putting into a private pension plan or RRSP? Are you saving
anything for your future or are you spending your disposable income on
BMWs, ATVs, big screen HD televisions, cottages with boats and sea-doos,
dinners at fine-dining restaurants and one or all of the numerous
electronic toys that are such an important part of our daily lives? I once heard a caller on a Toronto talk radio station mention that for two years in a row, he earned bonuses of close to $20,000 each year. The caller stated that of the combined total of almost $40,000, he contributed only $4000 to his retirement fund. Where did the rest of the money go? Now, I should give him the benefit of the doubt that maybe he put most of that money on his mortgage, but you do have to wonder where it went.
Someone close to me was earning $84,000 per year, at the age of 24,
working for a major computer programming company. As a pubic sector
employee for the past 24 years, I have yet to reach that threshold,
although I am finnaly getting close.
Now I realize that not
everyone out in the private sector doesn't make anywhere close to a
six-figure salary (Walmart and Tim Hortons employees, just to name two),
but I think that anyone earning an income can put something away for
their retirement. Now I realize that for some people, the monthly
budget is extrememly tight, but how many coffees do you buy from Tim
Hortons? How many lottery tickets do you buy each week. Do you smoke?
Maybe you could take some of the money spent on such items and put them
into a savings plan. Many employers offer RRSP deduction plans, where
they take automatically take money off your paycheck and put them into
the savings plan of your choice. As someone who takes advantage of such
savings methods, I can say that after a while, you really don't miss
I also take my spare change at the end of the day and
put it into a container in my kitchen, which I call my "lottery fund",
which I call such because I figure I have a better chance of getting
money out of this container than I have of getting from the lotto.
the way, how many people realize that, as a municipal government
employee (getting a pension through OMERS), that my retirement medical benefits run out when I am 65? Yes
I will be getting an indexed, guaranteed pension, but at 65, I will
have to buy supplemental health insurance to cover things like medicine
and dental care. Teachers, believe it or not, are in the same situation
This is in addition to having my OMERS pension clawed back when I start collecting the Canada Pension.
Not quite the "gold-plated" pension plan that some people think