Overpayments reopen old wounds for pensioners' association
Spokesman wants those who received pensions "free-of-charge" to pay back money
The provincial public pensioners' association is expressing dismay over a revelation that hundreds of retirees will have to pay back nearly $1 million in overpayments, and is suggesting the provincial government needs to go further in righting the many wrongs that have occurred over the years.
During a news conference in St. John's Thursday morning, spokesman Ralph Morris described a litany of "abuse" by past governments of the public sector pension fund, which is hobbled by a massive unfunded liability that he blames squarely on the government.
He said funds were redirected for the building of highways and bridges. And in many cases, people were given credit for pensionable years of service even though they worked a very short time with government, or not at all, and didn't pay into the fund.
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"If they're going to do a full audit and take back maybe $300 or $500 or $1,000 from a little old lady who's out there receiving less than $13,000 a year, then we expect those large pensions that are out there, that were given free-of-charge, to be paid back into the fund also," Morris said.
Morris said "hundreds" of so-called ex-gratia pensions were handed out over the years through a loophole used by politicians to reward "friends and neighbours."
Morris wants that money paid back along with all the other money used by governments for political gains.
"The plan has been used as a slush fund by governments for anything and everything except pensions," he said, adding that if such behaviour took place in the private sector, "people would be in jail with the keys thrown away."
Errors blamed on clerical errors
Finance Minister Ross Wiseman revealed Wednesday that nearly 430 pensioners in this province are being contacted this week and notified of a double blow to their pocketbooks.
An audit of the payroll system found that some 401 teachers and 26 public service workers — all retired — were receiving more money than they were entitled to over the past decade.
Total amount? Roughly $935,000.
Wiseman blamed the overpayments on clerical errors, and an old and antiquated payroll system.
Most of the overpayments are less than $1,000, but in extreme cases, some pensioners will be required to pay back more than $50,000.
The province has pledged to tailor repayment plans in order to not place undue financial hardship on people, including a maximum of 15 per cent of total income.
Morris accepts that the money should be returned, but not at all costs. He said some pensioners, already living at or near the poverty line, face the prospect of losing their home.
If they can't collect it all from them, so be it.- Ralph Morris
"If they can't collect it all from them, so be it," Morris said.
Morris described the situation faced by a 73-year-old former employee of the Waterford Hospital in St. John's. He was overpaid by about $48,000, and could lose up to $200 per pay period over the next 16 years, said Morris.
The man is "devastated" because after he turned 65 and noticed that many of his friends were having their provincial pensions reduced in order to integrate it with the Canada Pension Plan, he placed a call to the pension division.
He was told his income did not meet the threshold necessary for a reduction, so he was shocked to receive a call this wee, informing him of an overpayment.
"Now this burden is on him," Morris noted.
There are many other questions that need to be answered, Morris added, including whether the taxes paid by pensioners on the overpayments will be credited.
CBC News spoke with a woman Thursday afternoon who said she was too devastated to do an interview.
She was told this week that she will have to repay more than $40,000, and deductions from her pension will begin on April 15.
She's now worried about whether she'll have enough money to pay her bills.
Teachers' union president sympathetic to pensioners
Meanwhile, the president of the Newfoundland and Labrador Teachers' Association, James Dinn, weighed in on the issue Thursday.
During an appearance on CBC's CrossTalk, Dinn said "forgiveness is an option," but he said it would also not be fair to penalize the pension plan.
If the government decides to write off the overpayments, "they should make up the shortfall to the pension plan," he said.
Dinn described many retirees as vulnerable, with many budgeting their money down to the last nickel.
"I don't think any senior should be disadvantaged to the point where they have to determine: Can I afford to visit my children? Can I afford to eat? Can I afford to heat the house?"
Symbolic of poor relationship
Morris said it's unacceptable that such a long period could pass before the overpayments were noticed.
He said it's obvious that consecutive finance ministers "sat on their haunches" for the past 20 years.
Morris also said it's indicative of the closed-door attitude taken by governments in relation to the public pension fund.
The pensioners' association conducted two reviews of the pension plan in recent years, including one completed just last month, and Morris said the government refused to provide any assistance.