# MP Pensions



## sags (May 15, 2010)

It sounds like the government is going to introduce pension reform for MPs.

The full details aren't available yet, but some of it seems to have been leaked to the press.

It all looks good at first glance, but the devil is in the details, especially if the changes have been put into place as a precursor and justification for chopping public service pensions.

One detail I have read is that the MPs will contribute more into their pensions in the future, but the government is considering giving every MP an equivalent raise in pay before the higher contributions begin..........so the taxpayers are still going to be paying the cost.

http://www.canadafreepress.com/index.php/article/mps-ponder-a-pay-raise-to-pay-for-pension-reform

As mentioned in this article, another detail is the timeline and how the changes won't affect some current MPs with fat pensions.

http://fullcomment.nationalpost.com...onal+Post+-+Top+Stories)&utm_content=My+Yahoo

Tony Clement was used as an illustration.........and I read that Finance Minister Flaherty and his wife will be receiving numerous public service pensions with benefits of hundreds of thousands of dollars a year.

_F has been either a lawyer or a senior politician his entire adult life. He’s married to a lawyer who is also now a politician. F has a pension from being finance minister and MPP in Ontario, and he will have another after being finance minister and MP federally. His wife, Christine Elliott, will also have a political pension. Once F’s done in Ottawa, he’ll surely find seats on many corporate boards, and be invited as a partner into one of the larger Bay Street lawgopolies. His wife may run for premier. And win.

In short, this family is set set. F and Christine will have a household pension income in retirement of at least *$310,000, indexed and never-ending*._

http://www.greaterfool.ca/2012/03/30/geezer-dole/

To have any credibility, one would hope the announced changes aren't just a charade.


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## HaroldCrump (Jun 10, 2009)

sags said:


> It sounds like the government is going to introduce pension reform for MPs.
> ...
> if the changes have been put into place as a precursor and justification for chopping public service pensions.


Why shouldn't public sector pensions not be "chopped"?
Private sector tax-payers are sick and tired of paying outrageous benefits and pensions far above what most people can even dream of.

Over the last 3 decades, the militant unions have negotiated ever increasing benefits, far above the intent and provisions from the origins of these programs.
70% income replacement, full indexation, bridge benefits, > 100% tax-payer matches, and so on.

Where does it end?


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## GoldStone (Mar 6, 2011)

The budget bill that changes MP pensions also changes federal public service pensions. Public service pensions are not chopped.

Public servants will have to contribute more and work longer to receive the same pension.

Lots of details in the Ottawa Citizen article.
http://www.ottawacitizen.com/busine...r+workforce+public+service/7409944/story.html


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## LondonHomes (Dec 29, 2010)

sags said:


> F has a pension from being finance minister and MPP in Ontario,


Ontario MPPs don't have a pension plan anymore, they have a defined contribution plan which is a lot like an RRSP. Mike Harris removed the defined benefit plan for MPPs.

I have no idea why anybody who has a successful career and is not already independently rich would ever run for office. The risks of giving up a good job to be an MP or MPP are just too high.


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## Square Root (Jan 30, 2010)

Agree that it is risky financially to run for office. People do it for 3 possible reasons: power, prestige, a desire to improve things. Doesn't take too long for the third reason to fade. Incidently, I don't think a pension of $310k per year is that high for someone who has spent virtually his whole working life in public service. The risks are very high and you could easily find yourself out of a job at almost anytime. Not to mention the scrutiny your private life is subject to. Politics certainly never appealed to me and I don't begrudge them their perks and comp.


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## Cal (Jun 17, 2009)

HaroldCrump said:


> Why shouldn't public sector pensions not be "chopped"?
> Private sector tax-payers are sick and tired of paying outrageous benefits and pensions far above what most people can even dream of.
> 
> Over the last 3 decades, the militant unions have negotiated ever increasing benefits, far above the intent and provisions from the origins of these programs.
> ...


Harold, don't hold back, tell us what you really think. :encouragement:

I have no doubts that some of our future austerity measures will call for reduced public pensions.


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## Guigz (Oct 28, 2010)

HaroldCrump said:


> Why shouldn't public sector pensions not be "chopped"?
> Private sector tax-payers are sick and tired of paying outrageous benefits and pensions far above what most people can even dream of.


Most public sector pensions do not provide "outrageous benefits far above what most people can dream of". It is not like working for the public sector is only for a select few.

To get one of these "outrageous" pensions, one only needs to apply to a job, have the proper qualifications and education, complete the qualification tests successfully, do the interview and score higher than the others that applied. Anybody can do it. 

Of course, assuming that you have a mid-level or higher job, the total compensation is likely lower or at best on par with what you could get in the private sector. 

I understand however from your other comments that you seem to have a bone to pick with the public sector and you are likely not interested in any of what I said.

I do think that public DB pensions should be capped at a certain amount and any salary above that cap should give rise to a DC pension. This would likely level the playing field.


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## HaroldCrump (Jun 10, 2009)

Guigz said:


> Most public sector pensions do not provide "outrageous benefits far above what most people can dream of".


Oh really?
So show me all these pensions galore that provide guaranteed 70% income replacement for 5 highest years of pay, bridge benefits to retire at 55, full indexation, and the tax-payer footing more than the employee %.
Also show me the corresponding RRSP portfolio required to produce the same results.
Also show me the changes needed to CPP to produce the same results.



> To get one of these "outrageous" pensions, one only needs to apply to a job, have the proper qualifications and education, complete the qualification tests successfully, do the interview and score higher than the others that applied. Anybody can do it.


Yeah, that's just it. Silly me.
Of course it has nothing to do with the fact that the unions are in bed with the politicians, the MPs and MPPs have a huge conflict of interest in this regard.
And of course the fact that we are running a $30B deficit at the federal level, and a $16B deficit at the provincial level is immaterial.
The fox is in charge of the hen house.
Just raise taxes again, problem solved.



> Of course, assuming that you have a mid-level or higher job, the total compensation is likely lower or at best on par with what you could get in the private sector.


As I said, show me the corresponding RRSP portfolio and RoR required to produce the same results.
And the changes required to CPP to produce the same results.



> I do think that public DB pensions should be capped at a certain amount and any salary above that cap should give rise to a DC pension. This would likely level the playing field.


I would agree with that.
No one is saying dismantle the entire pension system.
But there have to be reasonable limits.
Not a carte blanche to pillage the public coffers.

Your suggestion is reasonable, and a starting point for discussion.
What is not reasonable is to keep denying that the public sector pensions are outrageous for the tax payer, and keep denying that we have a [huge] problem.


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## Daniel A. (Mar 20, 2011)

> I do think that public DB pensions should be capped at a certain amount and any salary above that cap should give rise to a DC pension. This would likely level the playing field.
> 
> I like that idea sure better than what is in place.
> 
> Harold the bridge benefit may be the only saving grace to get them off the payroll sooner.


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## Guigz (Oct 28, 2010)

HaroldCrump said:


> Oh really?
> So show me all these pensions galore that provide guaranteed 70% income replacement for 5 *continuous* highest years of pay, bridge benefits to retire at 55*with 30 years of service*, full indexation, and the *employer* footing more than the employee %.
> Also show me the corresponding RRSP portfolio required to produce the same results.
> Also show me the changes needed to CPP to produce the same results.


These conditions are available to all employees of the federal public service (and likely very similar for provincial equivalent) so we are talking about 350,000-400,000 people, just on the federal level of goverment. All in, there are 3,631,837 people employed by the Gov' (all levels). Hardly what I would qualify as "out of reach of most people". 

If you want a pension, feel free to leave your relatively lucrative private job and join the other 3,631,837 employees making 53,469$ in salary on average. 



HaroldCrump said:


> Yeah, that's just it. Silly me.
> Of course it has nothing to do with the fact that the unions are in bed with the politicians, the MPs and MPPs have a huge conflict of interest in this regard.
> And of course the fact that we are running a $30B deficit at the federal level, and a $16B deficit at the provincial level is immaterial.
> The fox is in charge of the hen house.
> Just raise taxes again, problem solved.


I don't think that you know what you are talking about here. Are you saying that the unions and the MPs and MPPs hand picked 3,600,000 of their "buddies" to work for them? The nomination process for a position is controlled and documented, you can't just pick who you want. The rest of this paragraph is just random ramblings.



HaroldCrump said:


> I said, show me the corresponding RRSP portfolio and RoR required to produce the same results.
> And the changes required to CPP to produce the same results.


Ok. Remember when I talked about the average Gov' employee making $54K? Let's take him as an example. 

Gov' Joe:Let's put his top best 5 years salary at $60K. He will get a pension $42K per year assuming that he works for 35 years. According to the 4% model, you need about $1,050,000 to spend that amount each year in constant dollars. To get there, he needs to contribute about $6,000/year in his pension.

Private Joe: Let's put his salary at $54K for his entire career except for 5 years at $60K. Private Joe contributes the max allowed to his RRSP. After 35 years of service, he has about $928,000 assuming a real return of 5%. Joe also gets $12,000/year of CCP on top of that (which is already included in the first scenario due to the coordination of benefits). All in, with the same 4% model, Private Joe has about the equivalent of $1,228,000 in assets. To get there, he needs to contribute between $6,000 - $9,000 (depending on employer match) per year.

The comparison is not perfect because of the specifics which vary from situation to situation (e.g., RRSP matching, stock options, contribution ratios) but the final end result *can* be similar. Without even considering that the salary of the private employee is likely higher than that of the public servant.

Yes, the Gov' employee contributes less to his pension and does not have to share the risk of insolvancy, but my point is that the difference is hardly outrageous as you put it. YMMV





HaroldCrump said:


> I would agree with that.


I am glad that we agree on something! :love-struck:


The biggest obstacle in people having money in retirement is not that they don't have the option, it's that they don't take the necessary steps to make sure that they do...


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## Daniel A. (Mar 20, 2011)

You forgot the full indexation.


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## Guigz (Oct 28, 2010)

Nope, that's covered with the 4% model.

And whether CPI is the same as "real" inflation is debatable.


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## GoldStone (Mar 6, 2011)

Guigz said:


> Private Joe: Let's put his salary at $54K for his entire career except for 5 years at $60K. Private Joe contributes the max allowed to his RRSP. After 35 years of service, he has about $928,000 *assuming a real return of 5%*. Joe also gets $12,000/year of CCP on top of that (which is already included in the first scenario due to the coordination of benefits). All in, with the same 4% model, Private Joe has about the equivalent of $1,228,000 in assets. To get there, *he needs to contribute between $6,000 - $9,000 (depending on employer match)* per year.


I have a few quibbles with your example.

1. RRSP contribution limit is 18%. Private Joe's contribution + employer match cannot exceed that.

The maximum Private Joe can put in an RRSP:

the first 30 years: 54K * 18% = $9720 / year
the last 5 years: 60K * 18% = $10800 / year

I ran these numbers through compounding calculator at 5% real. I ended up with $926,000 after 35 years. Close enough to your number, assuming Private Joe contributes the max each year.

2. Lots of private employers don't offer retirement plans of any kind. This is not uncommon at all. I've seen StatCan data. If Private Joe is unlucky to have an employer like that, all RRSP contributions (9K-10K pa) have to come out of Joe's pocket.

Side note: between myself and my wife we worked for 5 different private companies. 2 out 5 didn't offer retirement assistance of any kind. The other 3 matched as follows:

Employee / Company
4% / 2%
5% / 2.5%
4% / 4%

As you can see, the total wasn't anywhere close to 18%. To maximize our contributions, we had to fork out more unmatched funds 

3. A real return of 5% is based on historic data. It is not guaranteed. It can run much much lower for a long time. Recent history is a good example ("lost decade for equities"). No one knows exactly what the returns of the markets will be over the next thirty years. Private Joe has to worry about stuff like that. Worry a lot. If Private Joe is unlucky to experience bad sequence of returns in the last decade before retirement, then what?

In contrast, Public Joe is completely insulated from the stock market risks. He can spend his income *to the last penny*. No need to save! If his pension plan ends up in a deficit position due to poor market returns, Private Joe(s) will come to the rescue. Very nice.

4. A real return of 5% assumes no fee slippage. Average Private Joe knows very little about investing. He is more likely than not to invest through an adviser, a.k.a. mutual fund salesman. There goes your 5% real. You have to deduct 2%-2.5% in fees. Repeat compounding exercise with 2.5%-3% real and see how much you have in the end.



Guigz said:


> The biggest obstacle in people having money in retirement is not that they don't have the option, it's that they don't take the necessary steps to make sure that they do...


Sure. But the bar is set rather high. To recap, here's what Private Joe has to do:

- Stay disciplined to maximize RRSP contributions each and every year, for 35 years
- Learn enough about investing to realize 5% real (much easier said than done)
- Get lucky not to experience bad sequence of returns before retirement

In the meanwhile, Public Joe lives a charmed life where none of the above matters. Everything is guaranteed.


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## HaroldCrump (Jun 10, 2009)

Goldstone addressed some of the points I was going to make.
In addition:



Guigz said:


> All in, there are 3,631,837 people employed by the Gov' (all levels). Hardly what I would qualify as "out of reach of most people".


Out of over $17M workers.
That's about 20%, give or take.
The gap between the public sector pensions and what is achievable for non-pensioned (or even pensioned) private sector workers is huge, and growing larger and larger each year.

Since 2008, many individual retirement accounts have been decimated.
Most of those are probably starting to crawl back up, but in the meantime they have lost 4 precious years.

Double whammy is that the period since 2008 has seen the largest tax increases, at least here in Ontario, since Mulroney gave us the GST.
Yet, our deficits have ballooned inspite of that.

Private sector workers in small and medium businesses have been laid off, taken pay cuts, pay freezes, lost bonuses, etc.

And what has the public sector seen - anywhere between 4% to 8% pay increases, and corresponding top-ups.

As I write this, there is a public sector wage freeze bill stuck in the legislature that will not see the light of day.
The teachers union has sued the provincial government (using tax-payer money).
The teachers have claimed that they will be writing 1-line reports for the spring reporting period.

The impudence and militancy of these groups is disgusting to say the least.

The issue of the generosity of pensions cannot be decoupled from the political factors that have brought this about in the first place.

People all across the political spectrum are asking these question - it is not just me.
The awareness is increasing, and the disbelief/anger at the public sector pensions are growing.



> join the other 3,631,837 employees making 53,469$ in salary on average.


Average number does not prove anything.
The average Canadian earnings are, what, barely $32K.
This means that typical public sector Joe makes nearly double the nationwide average, right?

The salary you are quoting does not include the PV of the pension, and many other benefits, such as lifelong extended drug plan coverages.
Those are essentially deferred compensations.

You are also ignoring the key feature of longevity protection.
The Private Joe's RRSP nest egg is not longevity protected.
OTOH, Public Joe will never run out of retirement money.

Every single feature - from longevity protection to inflation indexation to federal guarantees - has a monetary value.
Those cannot be ignored from the discussions.


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## GoldStone (Mar 6, 2011)

Harold, well said.

BTW:



Guigz said:


> If you want a pension, feel free to leave your relatively lucrative private job and join the other 3,631,837 employees making 53,469$ in salary on average.


In my smallish circle of friends, neighbours and co-workers, I know a dozen or so people who left private jobs to join federal government. I don't know a single person who moved in the opposite direction. It's a one way street. Can you explain that?

BTW2:

Here's a quote from the Ottawa Citizen article that I linked up-thread:



> Under the changes, all MPs and public servants will have to foot the bill for half of the contributions to their pension plans by 2017. Public servants have been slowly increasing their share in recent years and now pay about 37 per cent of contributions with the government paying the remaining 63 per cent. The contribution rates for the RCMP, which are now at 35 per cent and the military, which kicks in 31 per cent, will also increase to 50 per cent.
> 
> *Federal unions were ready for that change and weren’t even mounting much of a protest against the 50-50 cost sharing*


Imagine that. Unions are not mounting a protest. They know full well how good they have it.


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## Guigz (Oct 28, 2010)

I am not saying that the two scenarios are the same. I understand that there are differences. 

You guys seem smart, if you were to find that the total compensation package is so much overwhelmingly better in the public sector, you would work there, not in the private sector. Yet you don't. Maybe the grass is not that green on that side....


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## Square Root (Jan 30, 2010)

Guigz said:


> I am not saying that the two scenarios are the same. I understand that there are differences.
> 
> You guys seem smart, if you were to find that the total compensation package is so much overwhelmingly better in the public sector, you would work there, not in the private sector. Yet you don't. Maybe the grass is not that green on that side....


yes. That has been my point. Seems like it is more fun and easier just to complain. I see the real issue being governance, ie the system that determines total comp is a little broken in the public service. Too many incentives for the politicos to give in to the unions. This is also true in some private co's, like GM, etc. There are mechanisms to fix this and they will eventually come into play if needed, ie Greece, US, etc


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## Eclectic12 (Oct 20, 2010)

HaroldCrump said:


> ...As I write this, there is a public sector wage freeze bill stuck in the legislature that will not see the light of day.
> The teachers union has sued the provincial government (using tax-payer money)...


Depending on the union, the offer of a wage freeze in addition to increased employee pension contributions was rejected as McGuinty wanted more than just a wage freeze. Then too - I'm curious as to why McGuinty was talking about wage freezes when the one agreement reached over five months that was supposed to be the model that school boards negotiated in two months allows 40% of that union's teacher to receive a raise.

As for the "using tax payer's money" - what extra money is the gov't giving the teachers union that is being re-directed to the lawsuit?

If it is the teacher's wages - how is this any different than my co-worker who used his wages to sue his employer? 




GoldStone said:


> ... In my smallish circle of friends, neighbours and co-workers, I know a dozen or so people who left private jobs to join federal government. I don't know a single person who moved in the opposite direction. It's a one way street. Can you explain that?...


*shrug* - you move in different circles? 

It's hardly a one way street as without trying my smallish circle includes eight that went from gov't to private. Two commented that they wish they'd gone earlier as in addition to a salary raise - their yearly bonus from the private company was a minimum of $30K.

Just to illustrate that things are murky - there's also those who retired from gov't and went into private consulting. Do they count as gov't retirees or as current private sector workers or as both? 

In any case - I'd want to see some objective numbers before I presumed that my circle represents anything other than those I rub shoulders with.




Cheers


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## GoldStone (Mar 6, 2011)

Guigz said:


> You guys seem smart, if you were to find that the total compensation package is so much overwhelmingly better in the public sector, you would work there, not in the private sector. Yet you don't. Maybe the grass is not that green on that side....


I came to Canada at the age of 29. I didn't have family or friends here to give me advice or steer me in the right direction. I found a private job and stayed on that path. I taught myself everything I could about RRSPs and investing. DB pensions never came on the radar. None of my employers or my wife's employers offered them. I only became aware of their value after I hit 40. I'm 45 now. It's too late to change horses.

As Harold mentioned in his previous post, public DB pensions are loaded with features. Each feature has a monetary value. This monetary value is not easily discernible by a layperson. You need to become somewhat of a pension expert to understand how valuable the total package is. It helps if you have family or friends in the public service to clue you in.

Aside from that, our personal situations are irrelevant. A red herring. We are debating a matter of public policy.


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## GoldStone (Mar 6, 2011)

Eclectic12 said:


> Just to illustrate that things are murky - there's also those who retired from gov't and went into private consulting. Do they count as gov't retirees or as current private sector workers or as both?


They count as the smartest of the smart. They earned their maximum or near maximum DB pensions. They took advantage of the early retirement provisions. Now they enjoy the best of both worlds. Do they get to collect bridge benefit while they are privately employed?



Eclectic12 said:


> In any case - I'd want to see some objective numbers before I presumed that my circle represents anything other than those I rub shoulders with.


Agree. Let's not trade anecdotes. They don't prove anything.


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## MoneyGal (Apr 24, 2009)

GoldStone said:


> As Harold mentioned in his previous post, public DB pensions are loaded with features. Each feature has a monetary value. This monetary value is not easily discernible by a layperson. You need to become somewhat of a pension expert to understand how valuable the total package is. It helps if you have family or friends in the public service to clue you in.
> 
> Aside from that, our personal situations are irrelevant. A red herring. We are debating a matter of public policy.


Exactly this. The value of publicly-funded pensions is a matter of public interest. 

A confounding factor is that it is virtually impossible to purchase in the open market an annuity which replicates the features of a public pension. For example, there is virtually no market for inflation-indexed annuities. 

Another factor is that the cost of a privately-funded annuity will be higher (as much as 30% higher) than a government-funded retirement pension, because the life tables used by private funders (insurance companies) and public funders are very different (the markets are very different). This issue is particularly exacerbated for men. 

And no open-market pension option will have the counterparty guarantee offered by a public sector pension, which is not a feature with monetary value per se, but a feature that makes every other option less attractive / more risky by comparison.


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## Eclectic12 (Oct 20, 2010)

GoldStone said:


> They count as the smartest of the smart. They earned their maximum or near maximum DB pensions. They took advantage of the early retirement provisions. Now they enjoy the best of both worlds. Do they get to collect bridge benefit while they are privately employed?...


It seemed to me the smartest of the smart were the ones who retired and went back onto high profile public projects. Not only did the ones in Ontario get to collect the bridge funding etc. plus "bump up my consultant's pay as I'm not willing to do this for what I used to" - they also would take their favourite season off, requiring backfill.

I believe some provinces such as Alberta have stopped such double-dipping ... or maybe only if the consulting was for the provincial gov't. 

I have not heard of Ontario stopping it.


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## Maltese (Apr 22, 2009)

Harold, why haven't you applied to become a Federal Government civil servant?


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## Homerhomer (Oct 18, 2010)

For high earners government jobs do not pay enough, for average Joe making $100K or less the total benefit package offered by the government positions doesn't even compare to what most private companies offer their employees, it's like a different world.

20% of workforce in Canada working for the government, ouch, why complain about Greece!!!!


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## sags (May 15, 2010)

20% seems like a high number.........but it is possible if everyone is included.

If we want a smaller public service.............where do we cut?

What services are people willing to wait longer for............or not get at all?

Not the ones that affect them directly, I'm sure.

As to wages, pensions, and other benefits............it is a total wage compensation package, just like anywhere else.

If it is competitive..........or as many people have said is less than competitive............why fix something that isn't broke?


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## GoldStone (Mar 6, 2011)

sags said:


> 20% seems like a high number.........but it is possible if everyone is included.


StatCan numbers are readily available:
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/labr66a-eng.htm

As of September 2012:

Total employment: 17,565,700
Public sector: 3,602,100

That's *20.5%*

StatCan definition of public sector: _Those who work for a local, provincial or federal government, for a government service or agency, a crown corporation, or a government funded establishment such as a school (including universities) or hospital._



sags said:


> If we want a smaller public service.............where do we cut?
> 
> What services are people willing to wait longer for............or not get at all?


No need to cut service or wait longer.

How about we start paying our elementary school teachers like we pay our aerospace engineers?

Average hourly earnings:

Ontario elementary school teacher: *$74/h*
Canadian aerospace engineers: *$40/h*
Veterinarians: *$38/h*
Civil engineers: *$37/h*

*Source*


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## bgc_fan (Apr 5, 2009)

GoldStone said:


> StatCan numbers are readily available:
> How about we start paying our elementary school teachers like we pay our aerospace engineers?
> 
> Average hourly earnings:
> ...


I remember seeing this article and thinking about what a crock it was. Mainly there are stats, lies, and stats. 

He talks about a $78/hr salary (not including benefits). My first thought was that he took an average annual salary and divided it by open school hours. Then he went and turned it around to saying that the teachers get paid that salary for 40 hr week to get $165K annually. Of course he does not explain how he derived the original $78/hr salary, so I am speculating on the salary calculation. 

I like the fact that he will make allowances for lawyers billing $450/hr, but then quickly plays fast and loose with the facts. He starts saying that it's true that a mid-level lawyer would charge that, but that juniors only docket 35 hrs/week, while working 70 hr. Okay, I'll give the benefit of the doubt on that, but then saying that the rest of the money goes to overhead. So, if I understand the logic and math correctly, let's say $450/hr*35 hrs/week*48 weeks gives $756,000 gross for the lawyer. Yet, only takes home $50K annually. Either lawyers are the worst businessmen in the world, or something is missing. Perhaps law firms treat their juniors like slaves and pay them accordingly (which tends to happen to just about any profession to start, but after a few years changes), but then when he talks about the entrepreneurial risk, that implies that the lawyer is working on his own. So basically, he is juggling around a number of different scenarios together and implying that they are all the same. Of course if any of you have more insight in the matter, I'd be happy to be enlightened.

While I can't vouch for the validity of this website, it would appear that the average salary is around $30/hr http://www.livingin-canada.com/salaries-for-elementary-school-and-kindergarten-teachers.html. The site itself seems to be non-partisan, so I do not see why there would be much difference between reality and what is posted.

Another site that is more official would be from the Ontario Public Sector Disclosure list http://www.fin.gov.on.ca/en/publications/salarydisclosure/2012/schbd12b.html. Everyone who would make more than $100K would be on the list. While there are the odd teachers, the majority are principals and other administrators.


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## Plugging Along (Jan 3, 2011)

^ I have to agree with the stats can be made to look however they want. I don't know of any teacher that takes home $168K in salary a year. 

Having come from private sector, and currently in public, I can vouch for higher income earners, the public sector in wage compensation sucks. I took a 15% pay cut, and that was before I lost my stock options, bonuses, etc. I approached by companies and people quite regularily with offers of 20- 30% more. So why the heck to do I stay?

The main reason is that I am getting experience that I will not get any where else in the private sector. The thing with government that I have learned, is that the public sector will choose projects not just on ROI, and $, but rather it's the right thing to do. This is actually really refreshing. Where I work, they make choices for sustaining the environment even though its a more expensive option. There are projects to help the vulnerable, because it's the right thing to do. I find it quite interested observing my co workers who have been there for a long time, they really do want to make a difference.


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## GoldStone (Mar 6, 2011)

okay, I re-read the article more carefully.



bgc_fan said:


> He talks about a $78/hr salary (not including benefits). My first thought was that he took an average annual salary and divided it by open school hours. Then he went and turned it around to saying that the teachers get paid that salary for 40 hr week to get $165K annually. Of course he does not explain how he derived the original $78/hr salary, so I am speculating on the salary calculation.


I agree that his estimation of $162K annually based on a 40-hr week doesn't make any sense.

As to $78/hr rate, here's how he explained it:



> My figure is based upon information provided by the Elementary Teachers’ Federation of Ontario as to *the required minimum days worked per year, hours per day and average annual remuneration.*
> 
> <snip>
> 
> Teachers may protest that they work much longer hours than what is required by their collective agreements. That is undoubtedly true for many. But employees in other vocations similarly take work home. And, in terms of the necessity to perform additional work, preparation time is already negotiated into teachers’ collective agreements as part of their required minimum work day.


This explanation is lacking in important details. He didn't provide the step-by-step calculation of the hourly rate. Therefore, I have to agree with you, bgc_fan. You are right to question his number.


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## MoneyGal (Apr 24, 2009)

More fuel for the fire, this time from the OECD, which finds that teachers in Ontario are paid $68 per hour (elementary) or $74 per hour (secondary) of teaching time: 

http://www.theglobeandmail.com/repo...ear-the-top-of-the-oecd-class/article4541629/

Those rates are derived from data provided directly by the Ontario Federation of Teachers, and are cited in the original report (the link I provided is to a discussion of the report.)


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## bgc_fan (Apr 5, 2009)

MoneyGal said:


> More fuel for the fire, this time from the OECD, which finds that teachers in Ontario are paid $68 per hour (elementary) or $74 per hour (secondary) of teaching time:
> 
> http://www.theglobeandmail.com/repo...ear-the-top-of-the-oecd-class/article4541629/
> 
> Those rates are derived from data provided directly by the Ontario Federation of Teachers, and are cited in the original report (the link I provided is to a discussion of the report.)


Except they are playing fast and loose with the facts. The bottom line is a top salary of $55K after 15 years of teaching. Translating it into an hourly rate skews the salary because their hours is not the same as a 9-4 job for 12 months. For example, if we multiply the $68/hr (which they derived from $55K/year) for a 35 hr work week for 9 months we get $85K. Somewhere, there is some data missing. Maybe they don't count prep time as working time. Anyway, it's the bottom line that is important and not what numbers you can get by manipulating data.

The compensation seems generous enough, there is no need to exaggerate.


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## MoneyGal (Apr 24, 2009)

But they didn't derive their $68/hour for a 35-hour work week. That is a rate per *teaching hour*. Public schools don't run for 35 hours per week; school is from 9-12 and then 1-3:30 = 6.5 instructional hours per week = 32.5 teaching hours per week.


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## bgc_fan (Apr 5, 2009)

MoneyGal said:


> But they didn't derive their $68/hour for a 35-hour work week. That is a rate per *teaching hour*. Public schools don't run for 35 hours per week; school is from 9-12 and then 1-3:30 = 6.5 instructional hours per week = 32.5 teaching hours per week.


You'll notice that a delta of 2.5 hrs a week is not going to make a large difference in the overall. But really, if you want to reverse engineer the numbers, a $55K annual salary and $68/hr means the teacher works 809 hrs/year. According to a 32.5 hr week, that's about 25 weeks a year. Are you saying school is open 6 months a year?


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## MoneyGal (Apr 24, 2009)

I don't really have a dog in this fight. I have no idea how many hours teachers are paid to work. I know none of the teachers of my one child in public school will meet with me except at report card times (by the way - I'm supposed to take time off work to attend those, as they are scheduled during school hours), because "they don't work past 3:30," I'm not supposed to approach them on the playground if I happen to be dropping off or picking up a kid as "that is not official parent-teacher discussion time" and I'm also not supposed to e-mail them directly, nor do they come to Parent Council meetings. [shrug]

I had to edit because I made a punctuation error. Clearly I am a product of public schooling. (I hope this comes off as the joke it is intended to.) (Additional side note: I have one child in private school for the first time this year and I am really astounded at the differences between public and private school and the teachers are a huge factor.)


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## bgc_fan (Apr 5, 2009)

I don't have a dog in this fight either. I just don't like it when misleading information is used in what could be a constructive debate. I don't even have a kid and it has been a long time since I've been in school, so I don't remember the particulars.


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## MoneyGal (Apr 24, 2009)

Well, one thing I discovered is that they are using USD and 2009 dollars (the first fact is mentioned in passing in the Globe article). Here's a link to the full dataset from the OECD: http://www.oecd.org/education/preschoolandschool/educationataglance2011oecdindicators.htm

If/when I have more time I will dig into this to see the info on teaching hours for Ontario.


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## Homerhomer (Oct 18, 2010)

sags said:


> 20% seems like a high number.........but it is possible if everyone is included.
> 
> If we want a smaller public service.............where do we cut?
> 
> What services are people willing to wait longer for............or not get at all??


No need to wait longer for anything, just make them more efficient like we all are in private sector.

Get rid of half of the politicians who never accomplished anything, that isn't going to affect any services.

Just heard on the radio (hence not sure if the info is 100% correct), MP qualify for $126K per year pension after 6 years on the job.

WHAAAAATTTTTTTTT!!!!!!!! That's just nuts.


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## Eclectic12 (Oct 20, 2010)

MoneyGal said:


> I don't really have a dog in this fight. I have no idea how many hours teachers are paid to work. I know none of the teachers of my one child in public school will meet with me except at report card times (by the way - I'm supposed to take time off work to attend those, as they are scheduled during school hours), because "they don't work past 3:30," I'm not supposed to approach them on the playground if I happen to be dropping off or picking up a kid as "that is not official parent-teacher discussion time" and I'm also not supposed to e-mail them directly, nor do they come to Parent Council meetings. [shrug]...


I guess it depends on the board, level of school and maybe the principal/teacher. On the other end of the spectrum, I've had friends complain that of a class of 30+, two parents showed for the after school hours parent-teacher conference time (i.e. 7pm to 9pm on a week night).

On the bad end - it was my cousin calling two separate homes about a student that wasn't in class that clued the separated parents in that their child wasn't staying with either of them. (or going to school for that matter).


Cheers


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## bgc_fan (Apr 5, 2009)

MoneyGal said:


> Well, one thing I discovered is that they are using USD and 2009 dollars (the first fact is mentioned in passing in the Globe article). Here's a link to the full dataset from the OECD: http://www.oecd.org/education/preschoolandschool/educationataglance2011oecdindicators.htm


That's partially true. They had normalized it using the PPP (Purchasing Power Parity I believe), so it is not quite as simple as a currency conversion. It probably doesn't matter at the end of the day, but it does mean that there will be a slight delta between the actual salary and what is on that table.


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## MoneyGal (Apr 24, 2009)

bgc_fan said:


> You'll notice that a delta of 2.5 hrs a week is not going to make a large difference in the overall. But really, if you want to reverse engineer the numbers, a $55K annual salary and $68/hr means the teacher works 809 hrs/year. According to a 32.5 hr week, that's about 25 weeks a year. Are you saying school is open 6 months a year?


Apparently Ontario teachers teach 22 hours per week. http://www.thestar.com/parentcentral/education/article/548835--ontario-teachers-have-more-prep-time


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## bgc_fan (Apr 5, 2009)

MoneyGal said:


> Apparently Ontario teachers teach 22 hours per week. http://www.thestar.com/parentcentral/education/article/548835--ontario-teachers-have-more-prep-time


So, basically Ontario teachers spend the rest of the day hanging around the teacher's lounge? That is how I read that.

That's an interesting way of determining hourly wage. As an example, does that mean for firefighters we should only count the time that they are actually called into an emergency and hence have an inflated hourly wage instead of counting when they are on-call and sitting around the firehall?


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## MoneyGal (Apr 24, 2009)

I don't have any comment on that. The report, if you look at it, determines or derives a per-teaching-hour wage. Some teachers are paid for formal prep time and other activities; others are not. The actual report is fascinating and looks at educational attainment in a society and the number of hours kids go to school, etc. 

I don't think we should understand the $x-per-hour as an actual hourly wage in the way that is normally understood. However, again, as a way to provide international comparability, the OECD report came up with the concept of "teaching hours" and looked at teacher compensation through that lens. It is interesting to me that Ontario teachers only (according to their own contracts) actually teach 22 hours per week. 

If you read the linked Star article, currently Ontario teachers are paid for 22 hours(1300 minutes) of teaching time, 80 minutes of supervisory time, and 200 minutes of prep time per week. 

1300 + 200 + 80 = 1580 minutes, or 26.33 hours per week. Given that those numbers are apparently directly from the teachers' contracts, I doubt there's any fudging. I assume that's for a week with 5 teaching days.


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## bgc_fan (Apr 5, 2009)

MoneyGal said:


> I don't have any comment on that. The report, if you look at it, determines or derives a per-teaching-hour wage. Some teachers are paid for formal prep time and other activities; others are not. The actual report is fascinating and looks at educational attainment in a society and the number of hours kids go to school, etc.
> 
> I don't think we should understand the $x-per-hour as an actual hourly wage in the way that is normally understood. However, again, as a way to provide international comparability, the OECD report came up with the concept of "teaching hours" and looked at teacher compensation through that lens. It is interesting to me that Ontario teachers only (according to their own contracts) actually teach 22 hours per week.
> 
> ...


I read it and you misunderstood me. I don't doubt the numbers. I had a somewhat serious question. What are the teachers doing with the time that apparently isn't covered under their collective agreement? 

I guess the other issue is the idea of how you want to account for salary and why one shouldn't mix up someone who is salaried with someone who is paid hourly. My point being if you want to translate their salaries into hourly based on their collective agreement then yes they have an inflated hourly wage. So if you were to rail against the teachers saying that they are overpaid, and that they should make half their hourly wage ($34), that results in an annual salary of $27K which I'm sure people can agree is much too low.


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## GoldStone (Mar 6, 2011)

bgc_fan said:


> The bottom line is a top salary of $55K after 15 years of teaching.





bgc_fan said:


> So if you were to rail against the teachers saying that they are overpaid, and that they should make half their hourly wage ($34), that results in an annual salary of $27K which I'm sure people can agree is much too low.


I assume that $27K is based on $55K that you cited above. Can you reference the source of the $55K number? 

I think it's plain wrong.

Here's the official salary grid of Ottawa Carleton Elementary Teachers Federation
http://www.ocetf.ca/collective-bargaining/topics-of-interest/salary-grids.aspx

Scroll down to see 2011 grid.

Newly hired Category A teachers start at $44,930. They can progress to $59,315 after 5 years on the job, without upgrading their qualifications.

They earn more if they upgrade their category to A1, A2, etc.

Category A4 teachers with 10+ years of experience earn $92,821.


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## Daniel A. (Mar 20, 2011)

Boy did this topic get off track MP Pensions. LOL


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## bgc_fan (Apr 5, 2009)

GoldStone said:


> I assume that $27K is based on $55K that you cited above. Can you reference the source of the $55K number?
> 
> I think it's plain wrong.
> 
> ...


It's a link that Moneygal had posted two pages ago: http://www.theglobeandmail.com/repo...ear-the-top-of-the-oecd-class/article4541629/

Due to the way it is normalized, it is possible that it may deviate from the actual salary.


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## Cal (Jun 17, 2009)

As per MoneyGals last post, that is pretty sweet pay/pension for 26.33 hours a week. If the teachers were to work 40 hours a week and put in 12 months, and you consider the pension, that would be in the range of what alot of MD's take home a year.


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## bgc_fan (Apr 5, 2009)

Cal said:


> As per MoneyGals last post, that is pretty sweet pay/pension for 26.33 hours a week. If the teachers were to work 40 hours a week and put in 12 months, and you consider the pension, that would be in the range of what alot of MD's take home a year.


Or, because they are salaried and not paid on an hourly basis, they get the same total annual pay for the extra hours worked and you have a corresponding decrease in hourly pay.


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## Eclectic12 (Oct 20, 2010)

Cal said:


> As per MoneyGals last post, that is pretty sweet pay/pension for 26.33 hours a week. If the teachers were to work 40 hours a week and put in 12 months, and you consider the pension, that would be in the range of what alot of MD's take home a year.


For the teachers that work that ... yes.

Though if that's all that's needed, I can't help wondering why my cousin was spending evenings and weekends grading papers or doing reporting the ministry required or attending staff meetings.

I suppose it's no different than the salaried managers at work. Some are regularly in at 9am and gone by 5pm while others are around more including weekends.


Cheers


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## HaroldCrump (Jun 10, 2009)

*Pensions still too generous*

The C.D. Howe institute published a new report stating that even after the reforms, the public pensions are still too generous.
Not just the MP pensions, but the general federal sector.

http://www.huffingtonpost.ca/2012/11/01/mp-pensions-cd-howe_n_2058281.html

_The C.D. Howe Institute report says the government is underestimating the plans' liabilities by about 40 per cent, or $100 billion, so taxpayers are on the hook for more than advertised._

Full report:

http://www.cdhowe.org/further-reforms-to-federal-pensions-required/19521



> The authors find:
> - The annual accumulations of wealth in these plans are now much higher than their reported current service costs, meaning that employee contributions will fall far short of their advertised 50-percent share.
> - Taxpayers will still bear more than half of the risk of changes in the cost of new obligations and – more important – the entire risk of changes in the cost of servicing past obligations unless the federal plans are converted to target-benefit plans in which benefits adjust depending on funding.
> - Federal employees now get tax-deferred saving that is triple or more what Canadians contributing to defined-contribution pension plans or RRSPs get, an unjustifiable unevenness in treatment.
> - The proposed reforms will still leave the MPs’ plan completely unfunded, which weakens parliamentarians’ moral authority to lead Canadian pension reforms.


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## Khlark (Nov 4, 2012)

GoldStone said:


> Harold, well said.
> 
> In my smallish circle of friends, neighbours and co-workers, I know a dozen or so people who left private jobs to join federal government. I don't know a single person who moved in the opposite direction. It's a one way street. Can you explain that?


This has to be the single most ludicrous thing I've ever read on this forum. I personally went from Gov't to Private as the pay and benefits weren't even close to comparable to what I was offered in the private sector. I also know of many running from Gov't service for this exact reason. The Gov't is very advantageous for those in lower level positions, but those are the top are taking a massive hit (particularly in finance and engineering).

Another rarely mentioned fact, in 1999 the Gov't removed (and is still being sued) $30 BILLION from the Federal Superannuation (Pension) Fund. To the individual talking about our current deficits, please take note.

Finally, in the same legislation passed to reduce the benefits of MP pensions, there was also a hit to Public Servants. Contributions up to 50% from 35% (which I agree with), and eliminating the ability for someone to retire at 55 based on years of service (this is being bumped to 65 I believe). Do the math for the benefits of a DB pension payment from 65 to the average life expectancy, it is nowehere near being the "golden ticket" the media would have you believe.


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