REVP Letter: Supplemental Pension Plan
Sister Robyn Benson addresses and explains the NBoD Supplemental Pension Plan in detail.
Dear Brothers and Sisters,
Over the past several weeks, there has been a lot of discussion via Facebook and YouTube regarding the pension discussion that took place at the February 2011 NBoD meeting.
Social media creates a fruitful and open dialogue and I believe it’s a vital tool for information sharing and networking. But when the information shared on these social media sites is not factual, it can be hurtful to our Union and especially damaging to the elected officials that receive the brunt of these criticisms.
Much of the discussion I’ve seen is speculation, and includes misleading and completely falsified information. With that being said, certain Facebook comments were removed by site moderators and some users were blocked without any clarification or explanation, and that was absolutely wrong.
I don’t understand why those actions were taken, nor do I support them, but I want to now try to build on those initial comments and create an open dialogue among my Brothers and Sisters in the Prairie Region.
First, I want to correct some of the more glaring inaccuracies:
- This was an NBoD decision as a whole, not just your REVPs. This decision affects up to 42 elected officials, but further to that, it will affect every member who is chosen to become an elected official in the future. The decision would level the playing field and establish a clear and defined benefits package for those who decide to run for election.
- There is no planned dues increase at the PSAC level and no dues increases are retroactive. All dues increases must go through PSAC National Convention or Component Conventions for approval.
- Any numbers you see or hear about how much money needs to be set aside are almost certainly wrong, as there are just too many variables to know at this point (years of total service, years of elected service, difference between substantive pay and elected pay, retirement date, funding sources –– whether from a component or PSAC, etc.)
It is also important to recognize that Treasury Board changed its interpretation of the “reciprocal transfer agreement” between the PSAC pension plan and public service superannuation (PSSA), which affected PSAC elected officers’ pensions and sparked the recent NBoD discussion and vote.
With that interpretation elected officers were previously allowed to take their contributions to the PSAC pension plan (including employer contributions) and transfer them into PSSA. This allowed them to receive a pension based on their full PSAC salary. As a result of Treasury Board’s interpretation change, the pension that elected officers receive has been reduced.
When we were apprised of the changed interpretation we hired an actuary consulting firm (Buck Consulting) to assess the options available to provide elected officers with a normal two per cent pension based on their years of service multiplied by their average best five years of income. The NBoD was presented with Buck’s initial proposals in October 2010 and agreed in principle. A more detailed recommendation was advanced and approved at the February 2011 NBoD meeting.
As you are aware, the principle behind the PSSA is that public service employees receive two per cent of the average of the best five years of pensionable service, times the number of years of service.
The following example should fully clarify exactly how elected officials’ pensions work:
If an elected official, who has worked for 30 years, has a final average salary (based on the best five years of service) of $105,000, they should receive a pension of $63,000.
But, elected officials must still pay into the PSSA based on the salary level they were at before they were elected. So, for that same elected official, their best five years of service would be calculated using their average wage in the public service ($70,000), giving them a pension of only $42,000.
This discrepancy is why elected officials also pay into the PSAC pension plan. However, no one can legally pay into two pension plans on two different salaries, so elected officials pay into the PSAC pension plan only on the difference between the two salaries, in this case it’s $35,000.
So, for an elected official who has been in office for nine years, the “second pension” would be worth $6,300 (two per cent of $35,000 times nine years of elected service). This brings the total annual value of the elected officers’ pension to $48,300 – still $14,700 less than they should be entitled to, based on the principle of the best five years of service, the same one that members of this union benefit from.
To account for the difference, the NBoD voted on a supplemental pension plan that would make up for the $14,700 lost, so that the elected official would receive in full the $63,000 pension they have earned. That is not a dollar more than our members who contribute to the PSSA would receive. It works out to two per cent for each year of service, based on the best five years of earnings.
To be clear, Brothers and Sisters, what this resolution does is give each Component, as well as the PSAC proper, the authority to take this respective resolution to their Component Conventions or their Executives. The PSAC proper will be taking this resolution to the 2012 PSAC National Convention. Nothing may be enacted until after the PSAC Convention, where it will be fully debated by the delegates on the floor.
Once again, the question for members is this: Should we apply the same principles that we have fought for in our superannuation plan to the elected officers?
Certainly there are some members who don’t believe so, based on the comments that are being circulated online. These comments are incredibly painful and hurtful to read and attack union officials’ integrity. We’ve been compared to as “pigs at a trough” and had members wish “misery” on us.
It’s unnerving and it’s gone beyond reasonable, Brothers and Sisters, and the membership needs to have these fallacies corrected.
I truly believe that in my time as REVP, every event I’ve spoke at, meeting I’ve attended, picket line I’ve walked, rally I’ve hosted and decision I’ve made, I’ve done so with as much integrity as is within my soul. I’ve been nothing but open and honest with the members in this region and will continue to do so.
But at the end of the day, it’s about the members and delegates exercising their democratic right to vote at Convention.
If you have further questions, or would like clarification on anything mentioned in this letter, please don’t hesitate to contact my office.
Regional Executive Vice-President
Public Service Alliance of Canada, Prairies