NOT good news for me

One of my goals in life is to retire as early as possible. Or at the very least, retire at the same time as my significant other…

[From today's Globe and Mail]

Public-Sector Pensions: Don’t retire yet

It will take more than a few trims to lift the federal government out of structural deficits and begin to offset this year’s projected $56.2-billion shortfall.

But possible changes to the pension plan for federal public servants could help save money in the long term, and keep the public service strong.

In an era of growing insecurity around retirement, the federal public service servants still have it very well. Employees with 30years of experience can retire with a full pension at age 55. In 2007-08, the employee contribution into the plan was only 32 per cent - the government contributed $2.6-billion of the $3.8-billion in overall contributions.

The government is reportedly considering revisions that would remove the incentives to retire early. Any changes must be implemented carefully. Simply stripping back pension benefits without any other reform could risk an unnecessary battle with public-sector unions, may result in an exodus from government by some and would make public service less attractive for new recruits. That said, some rebalancing is needed. Fiscal austerity will be just as important at the end of this decade as it is now. Federal employees pay a smaller proportion into their pension plans than do their peers in Ontario, Quebec and Alberta. The 50/50 formula in these provinces ought to apply in Ottawa, too.

Any changes that keeps senior public servants in their jobs longer today is even more welcome. The human resources situation in Ottawa is dire: approximately half of the employees at the executive level are expected to retire by 2012. In the next decade, the federal government will deal with major structural issues, developing and implementing Canada’s policies around income security, economic modernization, the coming demographic crunch and climate change.

As Sara Ehrhardt, an economist at the Department of Finance, said in her speech accepting the Public Policy Forum’s Award for Young Leaders last year, Canada needs the expertise of the generation of retiring senior public servants one last time.

Allowing civil servants to collect partial pensions while continuing to work for the government, would (if properly implemented) help ease the public-service leadership vacuum. Canada faces a crisis of fiscal sustainability and a lack of preparation for the policy challenges of the next decade. Reforms to the federal public-sector pension plan could help achieve both.