# Abusing privilege



## none (Jan 15, 2013)

So I'm new working in government. So far I really like it. Granted I have a pretty great job and work with a lot of very smart and hardworking people. It's great.

I have, however, had a few unhappy experiences the last week. The first was our reception who gave me the "don't talk to me I'm on break" line but the other I see as far more serious.

Apparently when a new year begins you get your entire year vacation allotment. Vacation is quite generous so someone who has worked in government for 20 -25 years gets 6 weeks vacation. Anyway, apparently a common retirement strategy is you take all 6 week of vacation in your final year of work immediately starting Jan 1st and then retire immediately thereafter. I think that's really unethical and an abuse of tax payer money. It's bogus.

I talked to someone about it and they justify it as 'this is a thank you for your service". What a bunch of crap. That really bothered me.

Does this happen in most places or is it a government thing?


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## fatcat (Nov 11, 2009)

people in the private sector whose taxes are paying the salaries of those in government are getting 2-3 and maybe 4 weeks vacation after 20 years, but 6 weeks, in private business ? ... ridiculous

this is why the ndp keeps losing in bc and will never win at the federal level

people in the private sector are earning 5% on their investments and paying the salaries of bureacrats who have guaranteed pensions pegged at 10%

its ridiculous and offensive and will one day come to en end

in bc this why the teachers are getting nowhere, because they have fat benefits packages that are better than the people paying their salaries

ridiculous


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## Davis (Nov 11, 2014)

I've been 24 years in the public sector (federal and Ontario) and I've never heard of that. I've always been led to believe that vacation taken but not earned would be clawed back on termination, which is only fair. Maybe it's a BC thing? I don't know where fat cat gets his 10% figure. That isn't how the federal and Ontario public pensions work. There is a lot of misinformation out there about public sector pensions.


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## Pluto (Sep 12, 2013)

I'd be surprised of stuff like that only happened in government. Look up some articles on Wall Street corporate severance stuff. 
Didn't one guy get fired on wall street in 2009 and get a 70 million golden handshake? I bet lots of large corporations have similar practices as you describe in government.


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## fatcat (Nov 11, 2009)

Pluto said:


> I'd be surprised of stuff like that only happened in government. Look up some articles on Wall Street corporate severance stuff.
> Didn't one guy get fired on wall street in 2009 and get a 70 million golden handshake? I bet lots of large corporations have similar practices as you describe in government.


thats a whole other abuse and certainly corporate pay and bonuses have reached ridiculous levels where people are making 10's of millions of $$$ even as they exit failing companies

the average middle manager in canadian (and certainly american) business doesn't get 6 weeks vacation a year 

regarding government employee pensions: 



> *Any fruitful discussion about government pension plans must spotlight contribution hikes and subsidies from taxpayers. *It is critical context. But that is exactly the context missing from a recent report by the Canadian Public Pension Leadership Council, a collective of government unions.
> 
> The paper’s authors frankly note they *did not address whether public sector pensions are “fair, adequate or too rich.” They instead criticize defined contribution plans, a reform option where future retirement benefits are determined by a combination of contributions plus investment returns – that compared to defined benefit pensions where future benefits to retirees are guaranteed in advance.*
> 
> ...


http://business.financialpost.com/2...-sector-employees-are-akin-to-a-blank-cheque/

these pensions that are defined before knowing what income will come in to pay for them are defined using earnings projections as high as 10% ... any shortfall is thus made up by the taxpayer ... it's ridiculous


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## m3s (Apr 3, 2010)

Abuse of privilege is doing something that is against the standing policy. If the policy should change that is another thing. You should read the official policy to see if that is the case. I have prompted many policy changes.

Was the 6 weeks earned during the previous calender year? I'm a big fan of pro rating everything as it is simple and fair. As a supervisor, I don't thing pro rating vacation would be a good idea. If someone is terminated unexpectedly after taking vacation should they have to pay it back during that turbulent time? Rather, I think people should work the first year to earn their first vacation. So, maybe it is actually unethical and an abuse of tax money for the OP to take vacation this year?!

Whether people should have 6 weeks of vacation after 25 years is another topic. In a salary paid career, people can certainly be more productive with more vacation time. 2-3 weeks vacation is very poor work-life balance imo.


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## hystat (Jun 18, 2010)

end of June is when we should retire. Working one more month could cost tens of thousands of dollars in pension lost over one's retirement years.
no privilege to abuse, just good financial sense due to contract wording:
https://local350.files.wordpress.com/2013/03/june-30-strategy-gc.pdf


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## Davis (Nov 11, 2014)

fatcat said:


> these pensions that are defined before knowing what income will come in to pay for them are defined using earnings projections as high as 10% ... any shortfall is thus made up by the taxpayer ... it's ridiculous


So it's not 10%, but "as high as 10%", which is a very different thing. I'd like to see actual figures, not hyperbole. If the projections are too high, then there will be shortfalls, but the big Ontario public sector pension plans are are actuarily sound: they are adequately funded through employee and employer contributions. So this is a notional benefit, not a cost to the taxpayers. There is no shortfall, so no cost. Also, this information if coming from the Fraser Institute, which as we know has an agenda that it aggressively promotes, so I would take it with a grain or six of salt.


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## rikk (May 28, 2012)

none said:


> Apparently when a new year begins you get your entire year vacation allotment .. . does this happen in most places or is it a government thing?


That's bizarre ....a BC thing? Vacation leave accumulates per days worked is my experience so there's no way a person could retire at the beginning of a fiscal year with any accumulated vacation leave (unless carried over). Suggest you read your contract (which everyone should do) ... I'd be interested, well ok, curious, about what it says about accumulating vacation leave.


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## sags (May 15, 2010)

Even in the private sector, a person gets the vacation pay that is accrued to them when they retire.

When I retired I received all the vacation pay and summer bonus in a separate cheque.

The qualification date for vacation time varies from company to company. Our "year" was in June and my wife's is in the previous December.


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## birdman (Feb 12, 2013)

My background is with financial institutions and like Davis suggests, in my experience you had to "earn it before you get it". When I retired on a Jan 1st date I had 6 weeks vacation coming to me but only because I didn't take any the previous year. However, I also received a few extra days based on my 6 weeks of employment while I was on vacation during my 6 weeks. Benefits and CPP, etc were also in effect during this period. Makes sense to me.


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## sags (May 15, 2010)

The Fraser Institute always forgets to mention one key factor in DB pension plans.

Unions fought for years to keep the surpluses built up in the pension funds, but the employers wanted to claim the surpluses.

The employers prevailed in the courts, but the trade off was the employer can declare a contributions holiday when the plan is in surplus, but must provide the funding if the plan is in deficit.


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## m3s (Apr 3, 2010)

fatcat said:


> regarding government employee pensions:
> 
> http://business.financialpost.com/2...-sector-employees-are-akin-to-a-blank-cheque/
> 
> these pensions that are defined before knowing what income will come in to pay for them are defined using earnings projections as high as 10% ... *any shortfall is thus made up by the taxpayer... it's ridiculous*


Any public pension surplus can and has been legally used to pay the *taxpayer's debt* as well. Your link mentions a few $1 and $2 billion pension bailout examples but conveniently forgets to mention the $28 billion surplus taken by Paul Martin? Maybe you should do some actual research yourself besides this drivel that is designed to enrage and entertain the simpletons..


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## NorthernRaven (Aug 4, 2010)

Various things being mixed up together here. As noted, actual earned vacation time is always paid out, everywhere - it has been earned. If there is unused vacation time accumulated as one crosses into the next financial/calendar year the organization uses, it may "carry over", and again, would be paid out eventually. There may be limits on the maximum amount of carryover, and the rest may be paid out immediately.

In my public service experience, "leave credits" for one's annual vacation time build as you "earn" them over the year. When you put in a vacation request, you need enough credit to cover it. The system I knew would "advance" any unearned credits to the end of the institutional year, so that you could use up some or all of your unearned portion. It would probably be "owed" if your employment ended before you earned the missing credits, and could be deducted from final pay and severance. I know of at least one system where there would be no clawback of unearned vacation in case of death, or if laid off (for employees having worked at least a year). It is possible that in some systems retirement also avoids clawback of unearned time, but I don't know.

However, putting in for retirement isn't an instant process, and there would certainly be scope for denying vacation time into unearned leave after the resignation date is set, etc. It would be fairly easy to check the union agreements and the HR procedures for any particular employer.


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## Rusty O'Toole (Feb 1, 2012)

My brother retired from working for the Ontario government some years back. First he took his sick days, then his vacation, then retired. Apparently this is standard practice in government.

Abusing privileges is what politics is all about. I can't believe anyone old enough to hold a job is surprised.


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## fatcat (Nov 11, 2009)

m3s said:


> Any public pension surplus can and has been legally used to pay the *taxpayer's debt* as well. Your link mentions a few $1 and $2 billion pension bailout examples but conveniently forgets to mention the $28 billion surplus taken by Paul Martin? Maybe you should do some actual research yourself besides this drivel that is designed to enrage and entertain the simpletons..


you don't need to do any research to understand that designating a benefit plan BEFORE you know whether or not you can *fund* it makes no sense .. as the article states:


> They instead criticize defined contribution plans, a reform option where future retirement *benefits are determined by a combination of contributions plus investment returns* – that compared to defined benefit pensions where future benefits to retirees are guaranteed in advance.


this is how it is done in private industry where defined benefit plans are *rare*

they are rare for a reason because they makes no financial sense

it's like demanding that your monthly income etf return you x dollars before you know how much it has made

the taxpayers who pay the salaries of government workers have very, very few of these plans

those that remain are often a huge burden to large companies who have trouble funding them and so they are on their way out

it is possible that pension plans can generate a surplus in a defined benefit plan that presumably would benefit the employer but it makes no sense to play that game

there is no reason why the model should remain in the public sector

it's going away for a reason


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## NorthernRaven (Aug 4, 2010)

Rusty O'Toole said:


> My brother retired from working for the Ontario government some years back. First he took his sick days, then his vacation, then retired. Apparently this is standard practice in government.
> 
> Abusing privileges is what politics is all about. I can't believe anyone old enough to hold a job is surprised.


Taking vacation is perfectly legit, they are earned days and would be paid out regardless. Taking them before retirement may help with tax or pension time in service, but otherwise is generally a wash.

Taking sick days when not sick is an abuse in any system, not just the government. Most government agreements provide for requiring medical confirmation for any significant chunks of sick leave being taken.

There is a separate question of getting some sort of payout or credit for unused sick leave. This would generally be a problematic feature for a system, but one would want to see specific examples presented - there might be incentives for very limited forms of this even in a purely market-based evaluation.


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## NorthernRaven (Aug 4, 2010)

NorthernRaven said:


> In my public service experience, "leave credits" for one's annual vacation time build as you "earn" them over the year. When you put in a vacation request, you need enough credit to cover it. The system I knew would "advance" any unearned credits to the end of the institutional year, so that you could use up some or all of your unearned portion. It would probably be "owed" if your employment ended before you earned the missing credits, and could be deducted from final pay and severance.


Quickly checking, Alberta public-service agreement doesn't have the "advance vacation credits" and is "only what you've earned". However, they start new employees out with 5 vacation days, and don't make you pay them back if you stay more than a year. PEI's public service employees, on the other hand, "_shall be entitled to advanced vacation credits equal to the amount that would be earned to the end of the present fiscal year_", but "upon separation from the Civil Service, shall compensate the Employer for vacation which was taken but not earned at the time." Again, death or layoff waives the repayment requirement.

Incidentally, some interesting vacation quirks can be found in the Arctic. To encourage use of vacation time outside peak seasons, there is a concept of "winter bonus" days - you can get an extra vacation day when you liquidate 5 vacation days between October and March. There can be also be some non-trivial amounts of vacation travel assistance, to offset for example the horrifying costs of family airfares from, say, Pangnirtung!


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## Davis (Nov 11, 2014)

It is not standard practice in the Ontario government. Sick days in the Ontario government are to be used when the employee is sick. Any other use is abuse. Either the employee is lying when taking them, or the manager is not doing his/her job in tolerating it. I'm not saying it doesn't happen, but it is not policy or standard practice. Some union contracts in the broader public sector (teachers, I think) used to allow cashing out, but I think that has been eliminated. When I left the federal government, I had 55 sick days accumulated. I did not take them, because I wasn't sick, and was not paid out for them. They disappeared, as is only fair.


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## Davis (Nov 11, 2014)

A coworker just joined the Ontario government from a financial sector company where she could take a sick day to take care of a sick child. Now she has to use a vacation day for that.


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## m3s (Apr 3, 2010)

Rusty O'Toole said:


> My brother retired from working for the Ontario government some years back. First he took his sick days, then his vacation, then retired. Apparently this is standard practice in government.
> 
> Abusing privileges is what politics is all about. I can't believe anyone old enough to hold a job is surprised.


Nope it's not standard at all. I don't have sick days and I can't accumulate vacation



fatcat said:


> you don't need to do any research to understand that designating a benefit plan BEFORE you know whether or not you can *fund* it makes no sense .. as the article states:this is how it is done in private industry where defined benefit plans are *rare*
> 
> they are rare for a reason because they makes no financial sense
> 
> ...


Private sector employees change jobs like underwear and private companies come and go with the tide, yet they always seem to have money to pay their execs $$$$ don't they?

DB pension works in the same way that most other government social programs work. The healthy and fortunate subsidize the medical costs of the unhealthy and unfortunate. Those who don't have kids subsidize the costs for those who have a dozen. Those whose house never burns down subsidize the costs of those whose does. I don't think people should be penalized for being healthy and living longer in retirement than others. I'm sorry Mr Fatcat we can't send you that ambulance today, you see the market is down lately and you've used more social program credit than you contributed this fiscal year. Please come again!

That is the difference between public sector and private sector mentality. The latter's world view is solely based on quarterly finances and has lost touch with reality and the full picture.


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## fatcat (Nov 11, 2009)

m3s said:


> Nope it's not standard at all. I don't have sick days and I can't accumulate vacation
> 
> 
> 
> ...


i would be cautious about conflating fiscally sound workers pension programs with important universal social services like health care ... 

the private sector is much, much larger than the public sector (even in canada) and these programs are going away for a reason, they aren't fiscally sound

you sound like my local ndp-mp, he wants everyone to have everything except when i ask him where the money will come from, he never has an answer


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## m3s (Apr 3, 2010)

fatcat said:


> you sound like my local ndp-mp, he wants everyone to have everything except when i ask him where the money will come from, he never has an answer


Maybe from the *$28 Billion* surplus that Paul Martin took from the public service pensions to pay taxpayer debt? I would never vote NDP.



fatcat said:


> i would be cautious about conflating fiscally sound workers pension programs with important universal social services like health care ...
> 
> the private sector is much, much larger than the public sector (even in canada) and these programs are going away for a reason, they aren't fiscally sound


Have you not heard of the CPP? I wouldn't call the private companies such as Nortel fiscally sound enough to trust with people's life after work. Retirement is not important to you!? Throw the elders in the ditch?

What we have are 2 extremes and there is probably a better compromise somewhere in between. DB pensions are actually a raw deal unless you dedicate an entire career to it.


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## sags (May 15, 2010)

What is the difference if the "taxpayer" pays public service salaries............or pays the salary of the CEO of the TD Bank, when they use their services ?

Same taxpayer.........different pocket.


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## m3s (Apr 3, 2010)

The difference in base salaries is something like +$10M vs $320k. The latter being the PM of Canada.


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## NorthernRaven (Aug 4, 2010)

DB pensions aren't actually some sort of black magic. Sums of money are set aside during employment, invested, and benefits paid out from the proceeds during retirement. The wrinkle (and the source of risk) is that the benefits are fixed, so if not enough money is fed in, or a high enough return isn't achieved, there won't be enough to pay out the benefits. Obviously, there can be trouble if unrealistic return expectations are used. My understanding is that a number of US public service plans (including firefighters, etc) have used high return expectations and opaque bookkeeping around contribution rates to hide full liabilities. On the other hand, I believe the federal Public Sector Pension Investment Board targets a real (after-inflation) return of 4.2%. This certainly doesn't seem unrealistic for a large, long-term investment fund, whatever other objections may arise in this specific case.

Increasing longevity is a factor, but I believe the federal employee-employer contributions have been tweaked upward in the past decade, and I know that the initial draw age/early-retirement has been bumped up by five years (now 65, and the old "rule of 85" is now "rule of 90"). As far as I know, the system is currently actuarially sound, given that assumed return rate.

There are probably interesting questions to ask about DB pensions, and pensions in general, but vague ranting isn't rational argument...


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## fatcat (Nov 11, 2009)

NorthernRaven said:


> DB pensions aren't actually some sort of black magic. Sums of money are set aside during employment, invested, and benefits paid out from the proceeds during retirement. The wrinkle (and the source of risk) is that the benefits are fixed, so if not enough money is fed in, or a high enough return isn't achieved, there won't be enough to pay out the benefits. Obviously, there can be trouble if unrealistic return expectations are used.


precisely, and we see it always the public sector unions pushing for defined benefits, and why not, they are unionized and have collective bargaining and have much better chance of succeeding at maintaining these unsound plans than private sector workers who mostly aren't unionized ... and who pay the salaries of government workers

a defined contribution plan which doesn't define benefits but waits to see what has been earned is much smarter

i also believe that we should also have old age pension and guaranteed income supplement programs to supplement and balance pensions from work

essentially i would like to see all workers, public and private drawing from the same pool, ie. investments in the same wide variety of assets


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## Davis (Nov 11, 2014)

The Ontario Pension Board's plan is 96% funded at the end of 2013, up 2% from the year before. www.opb.on.ca Unsound? Sorry, the facts don't support your rants.


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## NorthernRaven (Aug 4, 2010)

fatcat said:


> these unsound plans


Unless you can provide an example of a specific "unsound plan", and the reason it is unsound, this is merely vague venting or trolling...


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## Rusty O'Toole (Feb 1, 2012)

My brother was entitled to 21 sick days a year and took all of them. He took all the vacation and any other time off he could get as well. As long as it did not reduce his pay check.

He never got any heat from his supervisor or coworkers. They were all doing the same thing.


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## Davis (Nov 11, 2014)

I don't know where in the Ontario government your brother worked, or how long ago, but his experience is not typical. Employees in the two largest unions, OPSEU and AMAPCEO, and in management, get six sick days at full pay, not 21. This has been the case since at least 1997.


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## fatcat (Nov 11, 2009)

NorthernRaven said:


> Unless you can provide an example of a specific "unsound plan", and the reason it is unsound, this is merely vague venting or trolling...


it has nothing to do with "unsound" plans ... it has to do with imprudent and bad management of money

we will have no unsound plans until one day we do

if we stop defined benefits and switch to a system that only owes as much as it takes in then this is problem we won't face

i say again, you don't see them anymore in the private sector, only the public sector and there is a reason .. they are hammered home in contract negotiations because they are good for the unions (but not those who must guarantee them in the event of default)

we don't have to have defined benefit plans, they are one idea among many

i don't like the idea of setting private workers against public workers which is what would happen if an economy melted down or even in current times (look at greece)

there is no point, we should all be in the same pool as we are in health care


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## Rusty O'Toole (Feb 1, 2012)

I don't recall exactly when my brother retired but it was more than 10 years ago.


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## Davis (Nov 11, 2014)

> i say again, you don't see them anymore in the private sector, only the public sector and there is a reason .. they are hammered home in contract negotiations because they are good for the unions (but not those who must guarantee them in the event of default)


According to Statistics Canada http://www.statcan.gc.ca/daily-quotidien/140828/t140828d001-eng.htm in 2012, there were 1,427,067 private sector workers in defined benefit plans in Canada, and 2,995,771 public sector workers in defined benefit plans.

The trend is clearly downward in the private sector, but they are factually alive and well in the private sector, despite the hyperbole to the contrary. It wasn't hard to find the acts, by the way.


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## none (Jan 15, 2013)

Indeed - when I worked for hydro back east (non government) I could go either defined benefit or contribution. I chose the latter and they matched 6% of my salary. For my BC government one it's about 8%. Not a huge difference.

I wonder if people are confused and they're thinking about this: http://www2.gov.bc.ca/myhr/article.page?ContentID=60eb6a8f-2a92-bf85-4ccc-6f8d7f5835ea

If they are claiming this AND 6 weeks vacation I'm going to lose my friggin mind.

I was going to request a new laptop for me to work on until I found out it was going to cost us $2000 a year to rent it. Screw that, I'll grind away on my own personal one. I'm not going to subject the BC taxpayer to that bogus charge. Screw that.


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## m3s (Apr 3, 2010)

Sounds like a weak severance package

Don't obsess over this stuff if you just started and have 20-30 years to go, none.. It will most likely change without notice, as the private sector is in a race to the bottom and the public sector will have to follow. My severance package stopped accumulating last year. Most of these benefits are not safe without a +20 year commitment. The Americans have been "letting go" lots of people just before they hit the 20, so count your lucky stars until then.

The thing with public service is it is a long haul.


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## none (Jan 15, 2013)

I know. The issue is I have a brother who's part of the working poor. He works really hard and makes $17 an hour. It's people like him not the fat cats who are sad that they only have 100K in their RRSP at 40 (like me). 

I think GST cuts, TFSA, RESPs, cuts to education are TERRIBLE policy and it drives me crazy to see such stupid things implemented. But that's Canada for you right? Race to be the retarded American cousin.


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## Karen (Jul 24, 2010)

It is absolutely untrue that federal employees can take unearned vacation time early in the year they retire without having to repay it. It is true that they can take their vacation any time during a calendar year, but if they leave the public service before that vacation time has been earned, the amount owing is deducted from the departing employee's final salary or other money that might be owed to them. Here is a quote from the current Collective Agreement between Treasury Board and the Program Manager and Administrative Services section (the one that I was an employee of). It was strictly enforced when I was there, as well it should have been, and I have no idea where the OP gets the impression that it is is done differently. Perhaps some unethical employees try to get away with it and think that they can, but they will find their final pay cheque is smaller than what they expected.

Here's the quote: _In the event of termination of employment for reasons other than
incapacity, death or lay-off, the Employer shall recover from any monies owed
the employee an amount equivalent to unearned vacation and sick leave taken by
the employee, as calculated from the classification prescribed in the employee’s
certificate of appointment on the date of the termination of the employee’s
employment.
_


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## fatcat (Nov 11, 2009)

i have manifold gripes with the americans but disappearing defined benefit plans is not one of the them

it's fiscally unsound to declare a level of benefits before you know how much you have to fund them

its bad public policy to set public sector workers and the private sector workers (who pay the salaries of the public sector workers) on different paths for pensions and benefits

in the event of some kind of fiscal crisis, it could get very ugly as these groups are set against each other

it makes sense to have an all-inclusive approach to retirement that treats all workers fairly ... if we are all investing in and drawing benefits from the same pot, in the same basic way, we are less likely to see political strife

ask the greeks about defined benefit plans and fat pensions ...


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## My Own Advisor (Sep 24, 2012)

http://en.wikipedia.org/wiki/List_of_statutory_minimum_employment_leave_by_country


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## fatcat (Nov 11, 2009)

My Own Advisor said:


> http://en.wikipedia.org/wiki/List_of_statutory_minimum_employment_leave_by_country


usa = zero ... no surprise ... it remains the economic engine of the world ... it's also an experiment in darwinian natural selection as the unfit get unkindly kicked to the curb ... exciting country to live in but highly stressful even in the best of times ... not for me anymore


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## Eclectic12 (Oct 20, 2010)

fatcat said:


> ... it is possible that pension plans can generate a surplus in a defined benefit plan that presumably would benefit the employer but it makes no sense to play that game ...


I've worked for several companies that drastically reduced what their contributions as "investment growth is to strong".

Then too, when surpluses were more common - there was an attempt to change the pension laws so that like the US, a competitor could scoop up a company with a pension surplus, lay off the now redundant employees and voila, after recalculating future liabilities - there's an even bigger surplus to withdraw for the corporate benefit. 

I'm trying to remember which bank in Canada was trying this with a trustco they bought out but the judge ruled that under the legislation of the day - the surplus had to be split between the new employer and the participating employees.

Then too - the Detroit Free Press's analysis three years after the fact (when the information became available) showed that despite the claims of "investment performance" being the big problem, this accounted for a manageable deficit. It was the additional withdrawals by the management team, at least doubling the deficit which made the deficit too large.


Then there's also the Ontario gov't who borrowed to buy Suncor shares which turned out to be a disaster ... the last I heard, the pension was never repaid for the withdrawal.


So sense or not ... there seems to be examples that are benefiting someone.


Cheers


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## Eclectic12 (Oct 20, 2010)

fatcat said:


> ... a defined contribution plan which doesn't define benefits but waits to see what has been earned is much smarter ...


Is it though?

The private employer I worked for was trying to get people to switch from the grandfathered DB pension to a DC one.
Trouble is that DB one had something like a 6% contribution rate and for those who qualified - the DC one was under 2%.

I couldn't help wondering how many of those whose eyes were glazed over with the jargon and charts would end eventually up on OAS.
In my case - once I managed to sort out all the jargon, it turned out that the choice wasn't DB versus DC - it was DB or no pension.


Cheers


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## Eclectic12 (Oct 20, 2010)

fatcat said:


> i have manifold gripes with the americans but disappearing defined benefit plans is not one of the them ...


So you have no issue with US companies pulling out the executive pay/bonus out of the DB pension, declaring bankruptcy, pulling more money out to pay the windup team money and as it's a bankruptcy, there is no requirement to repay the pension?

Interestingly ... this was at the same time as the laws were set so that a personal bankruptcy would not wipe away education debt. 


Cheers


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## fatcat (Nov 11, 2009)

Eclectic12 said:


> So you have no issue with US companies pulling out the executive pay/bonus out of the DB pension, declaring bankruptcy, pulling more money out to pay the windup team money and as it's a bankruptcy, there is no requirement to repay the pension?
> 
> Interestingly ... this was at the same time as the laws were set so that a personal bankruptcy would not wipe away education debt.
> 
> ...


if i was the king, i'd put em all in the tower ... this is one of the many deficiencies of capitalism

it's not a binary choice of workers vs executives, the fact that defined benefits is a bad idea doesn't mean that i think that pension theft is a good idea, indeed, i think it should be sanctioned both financially and even criminally

score one for karl marx on that bs ...

the only reason defined benefits plans have survived as long as they have is simply because of public sector unions who love them ... the kind of people attracted to government employment tend to bias toward certainty and security in employment which is what those kinds of jobs deliver ... defined benefits fits the bill on this score


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## Davis (Nov 11, 2014)

Uncertainty of returns in a pension plan creates risk that someone has to bear. In DB plans, the risk is borne by the employer. In DC plans, the risk is borne by the employee. DC plans are therefore better for the employer, but worse for the employee. They are not a priori a bad idea. Return risk is a bad thing for pensioners, just as it ius for employers.

The notion that DB plans only exist because of public sector unions would be a surprise to the 1.4 million private sector workers who have then and their employers. But then it is just a notion, not reality.


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## Davis (Nov 11, 2014)

In a society that isn't willing to see old people starve, the risk of bad returns is ultimately borne by taxpayers too. If seniors' DC plans go tatas up in the turnip patch, they will end up collecting GIS. Seniors with DB plans from their public sector or private sector employers won't be collecting it though since their employers will bear the risk and keep paying adequate pensions.


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## fatcat (Nov 11, 2009)

Davis said:


> In a society that isn't willing to see old people starve, the risk of bad returns is ultimately borne by taxpayers too. If seniors' DC plans go tatas up in the turnip patch, they will end up collecting GIS. Seniors with DB plans from their public sector or private sector employers won't be collecting it though since their employers will bear the risk and keep paying adequate pensions.


two things, that some private employers still have db plans says nothing about the direction they are going which is down ... the list of large companies who are hobbled by huge pension obligations is a long one ...

in the case of government workers, the employer is us, the taxpayers, we would be wise not to agree to any more db plans

i do agree that in a sense the taxpayer foots the bill since i very much support oas and gis which should be there for people who need them

there should be a mix of pension sources based on dc's, private investments by workers in sheltered plans, oas, gis and so on ...

private industry and government workers should drop their lines in the same pool, it's better and fairer for all of us... again, look at greece if you want to see how badly this can go


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## m3s (Apr 3, 2010)

fatcat said:


> the fact that defined benefits is a bad idea doesn't mean that i think that pension theft is a good idea, indeed, i think it should be sanctioned both financially and even criminally


That's not a fact ^^

If a DB pension is properly funded and managed by a large enough group I don't see why it couldn't be a good idea. Everyone receives a benefit as a % of their contributions regardless of investment performance during their retirement. Surpluses from investment returns should stay invested to cover the years of losses, not pillaged or used to replace contributions.

If a DC pension is funded the exact same amount your benefits might be better or worse depending on the market during your retirement. The market is entirely out of your control, even less than your old age health!! Of course companies will tell you that DC pensions are in "fact" a better idea because it takes all the uncertainty and liability off their records.

Everyone wants a DB pension when the markets are down and then everyone wants a DC pension when the market are good. Depending on the market, DC pension could leave elders eating cat food or small fortunes to spoiled brats who never worked a day. DB pension is a good idea imo, just like universal health care is a good idea. It's about pooling funds to cover risks out of our control.

DC pension is like building a mansion on a fault line without home insurance. Might be a "good idea" in your mind it's not ideal.


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## andrewf (Mar 1, 2010)

DB pensions are too risky, and prone to failure. And once they fail, governments are expected to bail them out.


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## fatcat (Nov 11, 2009)

m3s said:


> That's not a fact ^^
> 
> If a DB pension is properly funded and managed by a large enough group I don't see why it couldn't be a good idea. Everyone receives a benefit as a % of their contributions regardless of investment performance during their retirement. Surpluses from investment returns should stay invested to cover the years of losses, not pillaged or used to replace contributions.
> 
> ...


but you can't draw something out of nothing ... The DC is an honest representation of your accumulated gains and investments ... If the money isn't there it isn't there. The db must be backed up if it doesn't meet its target return. 

That's why I believe in OAS and gis to supplement

Government workers should be on the same plan as the people that pay them. Private industry is overwhelmingly moving to DC.

Right now people living off their investments are happy to make 5% where government workers are drawing on db's pegged at double that.


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## sags (May 15, 2010)

The government has never had to bail out a public service pension yet, and I doubt they ever will.


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## Davis (Nov 11, 2014)

As we've discussed elsewhere, DBs are not "pegged at double that".


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## sags (May 15, 2010)

Our CPP benefits went up today :biggrin:


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## james4beach (Nov 15, 2012)

I don't like picking on the public sector (I say this as someone who has only worked in the private sector)

Going back to the OP's question: at my first job (private sector), we did receive all vacation days at the start of the year. By the time I left they switched to a method that accrued days over the year. We also had RRSP matching and this was not accrued or distributed over the year. i.e. you could theoretically put in a large RRSP contribution in January, have the company match it with their money, and then quit immediately after.

So I wouldn't say the public sector is unique for any of that. In fact when I was laid off, as part of my severance the company reminded me that I could collect a large RRSP match (it's a benefit, after all) even though it was only the first quarter

In the bigger picture, *I applaud the public sector for raising the bar in employment and quality of life*. We should all be applauding this, not being petty and jealous about what we perceive as unfair. We in the private sector get a raw deal in a lot of ways: too few vacation days or close to zero sick days, for example. What we should be saying to ourselves is:

"Hey -- why are we getting such a crummy deal? How the heck am I supposed to live my life and look after my family with so few benefits? It's time to make our lives better by _negotiating better contracts with employers_"

But instead, many in the private sector try to drag down the public sector workers with them. I think that's absolutely the wrong action to take. If anything, the public sector is providing a better position we should all aspire to. Pushing for better working conditions and contracts is a group effort ... we in the private sector can get it too, if we adopt the correct mind set and stop trying to _pull down_ our fellow workers just because we're jealous of their good deals.

i.e. we should all strive to RAISE our working conditions. Instead, the right wing (in a calculated anti-labour move) tries to get us to LOWER our working conditions. They do this by spreading ideas about how government workers have it too easy

It's an intelligent ploy from the pro-big-business, right wing. You really want to know why companies "can't afford" better employee benefits? Ask the top executives who are collecting insanely high pay. The CEO of my last company made 300x my salary.

Criticize the elites and über wealthy who are hogging the money. Don't criticize labourers who are your peers... we're all in the same position here in the middle class. They're trying to get us to fight each other over scraps -- it's a misdirection tactic, as used by magicians and con men. There's enough money out there to pay for solid benefits. The problem is that the über wealthy are hoarding it for themselves, and distracting you by telling you that the public sector workers have it too easy.


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## sags (May 15, 2010)

Very well said..........

The most cognizant sentence may be the last.................."the uber wealthy are hoarding it for themselves".

How much more evidence do we need, than the grotesque inequality in both wealth and income ?


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## sags (May 15, 2010)

Many on this forum may be too young to remember the National Day of Protest in 1976, when 830,000 Canadian workers banded together and refused to work.

Social unrest wont be limited to Greece and European countries.


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