CALGARY SUN: City Hall Unaware How Golden Its Pensions Are
City hall’s pensions are costing taxpayers a small fortune. There’s no debating that fact.
Unfortunately, city hall bureaucrats and councillors don’t seem to understand just how costly and unfair their pensions are.
Here’s a quick background on city hall’s pension situation.
Almost all city employees receive a pension through the Local Authorities Pension Plan. This plan describes itself as “quite generous.” LAPP’s website also notes that these pension benefits are a “substantial workplace benefit at a time when most Canadians have no workplace pension at all.”
And taxpayers are getting stuck with an ever increasing bill for these pensions. In 2002, the city spent $25 million on this pension. By 2019, the bill had exploded to $137 million. That’s more than a 440% increase in pension costs in less than two decades.
On top of this generous primary pension plan, more than 2,000 city employees are set to receive a second or third pension top-up when they retire. These second and third pensions cost taxpayers about $15 million last year. While city employees contribute some of the costs to the second pension, the third pension is 100% taxpayer funded.
City manager David Duckworth doesn’t think it’s fair to refer to these top-ups as second and third pensions.
But here’s the fundamental unfairness that Duckworth can’t seem to grasp: Calgarians without any workplace pension who are struggling with job losses and pay cuts continue to pay for pension top-ups in addition to an already generous primary pension.
While the city of Calgary recently tweeted that “city employees do not receive more than one pension,” in separate letters to the Canadian Taxpayers Federation and Secondstreet.org, the city provided charts that broke down the different plans under the heading: “multiple pension scenarios.”
Duckworth says ending these golden perks would make it harder to attract top talent. Putting aside the many Calgarians looking for work, other politicians are recognizing that ending these golden perks are the right move. A few months ago, the city of Red Deer decided to put an end to its third pension.
Some council members are also unable to grasp the unfairness of their own pensions. During a 2017 council meeting, Mayor Naheed Nenshi tried to justify council’s pensions by claiming it’s “pretty much standard” for employers to put $2 into a workplace pension for every $1 put in by employees.
This is wrong on a few counts.
First, even the generous primary pension benefit paid to city employees isn’t that lucrative.
Second, council’s pensions have required taxpayers to put in more than $2 for every $1 put in by council members. For example, the city spent more than $1 million on council’s pension in 2013, while council members only put in $139,000.
Third, Nenshi will receive a second pension upon retirement. He’ll receive the pension that all councillors receive, plus a second pension that is paid for completely by taxpayers.
Fortunately, council recently acknowledged that second pensions are unfair for taxpayers and voted to end the second pension for future mayors. If councillors can recognize that a second pension for the mayor is unfair, then they should also be able to recognize that second and third pensions for city employees is unfair. Further, council could scale back the cost of its own pension, and tackle the city’s main pension which, again, refers to itself as “quite generous.”
It’s unfortunate that elected officials and the city’s own administration have been spreading misinformation about the pension party down at city hall. Perhaps they’re concerned someone will come along with facts and crash the party.
Colin Craig is the president of SecondStreet.org and Franco Terrazzano is the Alberta director for the Canadian Taxpayers Federation.
This column was published in Calgary Sun on December 14th, 2020. To see article click here.
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