From the TJ today:
Tom Mann says it’s time to make New Brunswick’s public pension plans work for the entire province by turning the public dollars into government bonds that will keep money in the province instead of investing in the stock market and elsewhere.
Mann is a bit like the alien taking on Sigorney Weaver. He is flailing away in a desperate attempt to protect his membership from ‘cuts’.
I have been talking about the potential of using the public pension money for economic development right here. My suspicion, turns out mistaken, would have been that guys like Mann would want the money invested as far away as possible. Why risk the future pension of the NB civil service on a declining market like New Brunswick. Now, of course, I realize how twisted that is. That the province where the civil service actually works is not good enough for its pension monies. The people in charge of the province don’t believe in it enough to invest even 1% of its pension monies here. But I realize that is just hyperbole and cheeky talk on my part.
The truth is that the people investing this pension money have a mandate and it turns out can’t find enough projects in New Brunswick to even invest just 1% of public pension monies.
The challenge is simple. Obviously, right now placing public funds in low risk, low return investments like bonds to finance public works projects makes sense. These funds are getting hammered in the equity markets. But when (if?) the markets return, the best returns will continue to be in high growth markets and New Brunswick is not and never really has been a high growth market.
I do think that when the government pension fund looks at New Brunswick investments it should consider the economic benefits beyond the direct ROI. If the civil service retirement funds can make 15% in India and only 7% in New Brunswick but that 7% leads to thousands of new good paying jobs this should be a consideration.
Wishful thinking?
Back to Mann. It seems to me this he is actually dipping his toe in the water of economic development. This is new ground for public sector unions. Maybe they will finally figure out the link between economic development (i.e. taxes raised) and the ability to pay for the large and growing public sector.
‘There will be blood’
Harvard financial guru Niall Ferguson predicts prolonged financial hardship, even civil war, before the ‘Great Recession’ ends.. MORE…
http://www.theglobeandmail.com/servlet/story/RTGAM.20090223.wferguson0223/BNStory/crashandrecovery/home
What do you think of this? And how will it affect the advice you would give people?
And I always wondered about the older people selling their homes and renting. Was this a good idea, if the above is true?
And if it is a good idea, who advised them here in NB, while Ontario and BC were doing the opposite?
There seems no doubt that very tough times are coming and lasting.
Is this why only older people took this action because they had more of a tendency to listen to their parents, whereas todays younger never have and can not even visualize, at this time, what can and most likely will, happen?
The concept sounds patriotic but the reality of providing access to pension funds for political projects is frightening. Imagine how many yarn factories we’d have and how many Caisse’s we’d bail out. And if you are about to respond that the funds would not have political influence, explain just how that would be accomplished.
“If the civil service retirement funds can make 15% in India and only 7% in New Brunswick but that 7% leads to thousands of new good paying jobs this should be a consideration.”
This 8% delta is effectively a tax borne by the participating retirees. But what voice do these retirees have in the investment decisions that create these new good paying jobs?
I can tell you that if I was a retiree living on this pension, I would not be enthusiastic about the fund gambling with my investment. The fund exists ONLY because I worked for it, not through the largess of government. At this point in my life, I want to achieve the greatest return on my investment, regardless of where that investment might be. If NB companies want my investment, they need to convince me that my return will be competitive with other options. If they can’t, why not? And what does that say about the competitiveness of NB industry?
Here is a good deal for a lot of you wanting to save money on Energy.
Corn in 40 lb bags for sale 5$ per bag. For use in pellet stoves!!
R culberson @ sons.
Wait, didn’t you already pay for an Ethanol plant near there that uses corn? How do you spell schemes? As in a lot of schemes will be hitting the wall. How did they ever get started and why?
@Anonymous
The above retirees must also realize that the social safety net paying for their retirement is gradually going to be supported by a much lower number of taxpayers. I’d say that leaving 2-5% potential growth on the table to build a solid tax base in their home province is money well spent.
I’d be making significantly more money in Alberta doing the same job I’m doing here. I’ve left money on the table to return home. I’m also now paying taxes in NB rather than another province. If a retiree is unwilling to leave potential growth on the table to support NB, why should I?
You came home to support NB ? lol
And you would invest in NB companies instead of RRSP’s ?
Sure.
@Anonymous
I’m supporting NB by paying taxes in this province. I could be earning more, and paying less tax, in another jurisdiction. NBs hospitals, schools, roads, &c, won’t be improving much w/o new young taxpayers to shoulder the burden left by retiring boomers.
I guess your unaware that transfer payments look after those things ?
Look folks, try not to be so literal. I am not saying we should divert all the public pension money into New Brunswick-based projects. I am not saying to scrap your RRSPs and invest in New Brunswick companies. I am saying that we need to have a wide angle view of business investment. If the majority of the investment flow is outward for decades, you get the kind of economic malaise we have seen in New Brunswick.