Where's The Outrage Over Pensions?

You might be reading my blog wondering where is public outrage over pensions? For example, how can PSP Investments lose billions and still pay their top officers bonuses, allowing them to get extremely well compensated in a terrible year?

And it's not just PSP. The same is happening in many other large public Canadian pension funds, including CPPIB where top officers got millions with their bonuses after losing a whopping $24 billion in FY 2009.

So where is the outrage? I just came back from Greece where if even a fraction of this came out in the media, there would be riots in the streets. The same can be said about other European countries, especially in France.

But "civilized' Canadians seem to be sleepwalking while their pensions are dwindling. The unions are keeping silent too. Why? Maybe because they know that the federal and provincial governments are on the hook to pay out pension benefits even if the public pension plans are severely underfunded. Why make a fuss when you know the government will come in and shore up the plan?

Of course taxpayers might want to pay closer attention to what is happening at public pension funds. Because when it comes time to foot the bill, they are going to on the hook to shore up these plans. I wonder if the Canadian Taxpayers Federation is aware of all the nonsense going around in our large Canadian public pension funds. If not, they are ignoring the most pressing public policy issue of the next few decade.

Am I exaggerating? Perhaps, but if you look at what is going on right now in California, you are getting a glimpse of what will happen across most of the developed world. In California, public pensions are drawing scrutiny amid its crisis:


California's rapid economic decline has prompted Gov. Arnold Schwarzenegger to propose what once was unthinkable — rolling back generous pensions in a state heavily influenced by public employee unions.
The Republican governor said he's motivated by the need to save money. California has at least $63 billion in unfunded pension liabilities, an amount equal to roughly two-thirds of all annual general fund spending.

The concern is shared across the country, as local and state governments wrestle with hundreds of billions of dollars in unfunded public employee pension and retiree health care costs.

New Mexico this year approved longer work requirements — from 25 years to 30 years — for state employees starting in 2010.

New Jersey last year raised the minimum age to qualify for benefits from 60 to 62.

Kentucky now requires new police hires to contribute 1 percent of their pay to help cover retiree health benefits.

And Georgia has started a hybrid plan for new state hires that blends a defined-benefit pension — with set payments based on salaries — and a 401(k).

In California, Schwarzenegger dropped long-term pension reform from negotiations with lawmakers to close the state's $24 billion budget deficit. He said this week that he would press for pension reform now the state has enacted revised spending plan.

"Again, everyone understands we are running out of money," he told reporters. "We cannot continue promising people things that we cannot deliver on."

His proposal would not change the pension system for current workers, but would lower benefits for new employees. His office said such changes would save the state some $95 billion over 30 years.

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http://pensionpulse.blogspot.com/2009/08/where-is-public-outrage-over-pensions.html