Worse than it sounds

Apparently Stockwell Day's musings on public-sector pension benefits are being interpreted as potentially setting up a two-tiered system between current employees and future ones. But I have to wonder whether the statement is actually even more damaging than that.

Here's the passage giving rise to the concern among unions along with the NDP:

"It's not our plan at all to reduce benefits because the employees have paid in to those benefits and we will maintain them," he said in response to a question from a Conservative MP that referred to the concerns of federal unions.

It appeared to be a blanket assurance to worried workers. Yet in a brief answer to reporters following the appearance, the minister added a wrinkle to the government line.

"We've been clear. We're not reducing existing pension benefits," he said as he marched toward a staircase and declined any further clarification.

The insertion of the word "existing" was enough for union and opposition critics to conclude that new hires may be offered a lesser pension plan.

While I'd agree that the word "existing" is important, let's take a closer look at what it's modifying. Day's statement doesn't suggest that existing employees will be free from pension cuts, only that existing benefits won't be reduced. Without going into too much detail, that likely means that the only people who can breathe any easier are those whose pension entitlements have "vested" through retirement, and whose benefits can be seen as having been locked in.

In contrast, current public servants wouldn't be seen as having any "existing" entitlement to benefits. At most, Day's statement might suggest that the Cons won't go after the value of money already allocated to individual pension accounts. But he looks to have left the door wide open to attacks on both the pension funding formula and the availability of benefits in the future - meaning that the concern should be less a second tier of pension benefits for new hires than a wholesale attack on them across the civil service.