Roto admits:
"I have worked in the benefit and pension industry for over 35 years, my roles have included being on the consulting/actuarial side, as a pension regulator and as a plan sponsor."

That explains completely your comments. I have been involved in Defined Benefit Pensions and Inflation for 33 years. 

Roto said: "Few organizations other than multi- employer union agreements truely work from a Total compensation perspective "

Art replies: Then, not surprisingly, they will go broke. That is the fault of the employer, not the employee.

Roto said "As he approaches age 96, the benefit he will receive in 2009 will exceed the total of his and his employers contributions.

He certainly did not pay for his pension while he was working. Pension plans have always required a higher level of funding to pay the promised benefits but if the pension fund does poorly in economic times, if people retire early and live longer than expected then someone has to pay the costs."

Art replies: Pension plans are not individual plans. They are applied to all employees. As a group, employees pay for their pensions. The costly 96 year old is balanced by the retiree who dies shortly after retiring. Further, if the pension plan does well on investment, a surplus develops, but deficits and surpluses tend to average out - actuaries know what they are doing.
 
Roto said: "The federal pension plan was expected to have a cost around 12% of pay shared equally between the employees and the employer, I believe the plan now costs in the 24% range to be shared by the current employees and the employer. Retirees see their pensions increased by indexing but never paid enough to cover what they are recieving."

Art replies: See the actuarial reports. When the federal public service plan was indexed, the actuaries calculated the cost as 16.2% of salary (4.8% for indexing, 11.4% for the unindexed pension). Since the pension plan was part of the pay package, public servants paid for their pensions by doing their work. (Actuarial cost of my military pension at that time was 25.02% of salary. How would you like to have that much of your pay package controlled by politicians?

I would suggest that you do the arithmetic associated with Defined Benefit Plans and you will see that they are indeed a cash cow.

Re  your comments about employer sponsored health care being costly.I feel no sympathy whatever with GM or other companies which are said to be in trouble because of health care costs. They have actuaries, they have accountants. Within the corporation they knew what their costs would be.

Roto said: "Once you detemrine the best way to deliver the right service at the right time with the right price, then you should argue about who pays "

Art replies: The private sector provides virtually all our needs, efficiently. Why should it be any different in health care? Incidentally, since 85% of Americans are covered by insurance, the trouble with the U.S. system is access. And that is a social services problem, and we share that problem in our social services.

Roto

Experience with employer sponsored pensions suggest that employees should be wary of employer sponsored health care. A number of points raised by your note may be addressed by an example.

Suppose an employer decides that a group of his employees should be paid $60,000 a year, to meet the competition. Further the employer decides that a pension plan costing $10,000 should be included.

Clearly he can't pay both $60,000 and $10,000, otherwise his criteria for meeting the competition is destroyed. So he can announce that he will pay $50,000 salary plus a pension plan. That is referred to as the employer paying for the pension of employees. Alternatively he can announce a salary of $60,000 with $10,000 withheld for the pension. That is referred to as a pension paid by the employee. Or he can, and this is the federal government model, announce a salary of $55,000 with $5,000 withheld for the pension plan, to be matched by an employer contribution of $5,000. This is called a plan funded by the employee and the employer.

All three have the same result - $50,000 cash and a pension with an estimated cost of $10,000. There is no employee contribution. The whole pay package comes from the employer.

This and other questionable practices cover up the fact that Defined Benefit Pensions are a cash cow for employers and a silent robber of retirees.  Pensions for federal employees retiring this year will be based on the average of salaries earned in 2004.5,6,7,8. All are different dollars. I am  not speaking of quantity, but value. Averaging is meaningless. Then the pension is paid in 2009 dollars, which are of less value than all the other dollars. The result: 2009 pensions will be about 8% below what they should be, to the benefit of the employer. That is a 92% pension for life. 1979 retirees receive 75% pensions. The regulators in the Department of Finance, and the Minister of Defence are aware of these deficiencies and their cure. Apparently legislation prevents implementing the cure.

"The Toyota plant has only been around for 20 years and does not have many retirees, the GM plant for 40 or more and has a significant number of retirees. The difference is the cost of providing those benefits..."  To repeat the last line on my previous post:

"Are there plans where ex-employees get benefits but don't pay for them?"  Certainly pensions are paid for during the employment of the individual, There are no residual costs to the  employer. There is a residual benefit, as described above. Take care before getting involved in employer sponsored anything.

Only in Canada?

Roto. Just a comment on:

"As a plan sponsor in the US, one pays the majority of the cost and the patient pays the balance. If I improve the health of my employees by spending money on health and wellness, I not only end up with a happier, more productive worker but I save money.

In Canada, if I do the same, I get the happier, more productive worker but it costs me money."  I disagree.

A health plan is similar to a pension plan. It is part of the pay package. The employee is "given" a pension plan, or a health plan  instead of wages. It  is salary in another form. So the employer is gaining as you say by having a happier, more productive worker. It costs him nought. He is spending part of the workers pay package. And it makes him appear generous.

With respect to the US having a greater chance of "fixing the flaws" in health care, i believe it comes down to who pays.
 
As a plan sponsor in the US, one pays the majority of the cost and the patient pays the balance. If I improve the health of my employees by spending money on health and wellness, I not only end up with a happier, more productive worker but I save money.

In Canada, if I do the same, I get the happier, more productive worker but it costs me money.

What we need is a Health Care Manager who is paid the money(forget who pays) to take care of people. The Health Care Manager organizes all services, hospitals, doctors, testing centres, drug and all suppliers. The Health Care Manager makes money by delivering the best services in the right facilities and by keeping his customers healthy.

There would be 2 or 3 HCM's in each area, so individuals could choose if they had a preference. 

The HCM's would accept all customers and would likely have some level of stop/loss insurance to protect the HCM from catastrophic costs.

The employer, the government and the individual could all be contributors to this HCM as each sees fit.

Try to build this model in Canada would be next to impossible but in the US, where a significant portion of the money is held by the employers and the individuals. It is possible.

In several provinces, they are working on regional models that are similar to this but run into difficulties in that they do not control or have access to all the services or the money for such services needed to drive change.   

In 2008, we spent $172 billion on health care in Canada.  That covers all health care costs for over $33 million people.  That works out to be slightly over $5,000 for every Canadian - regardless of their current health.  We pay almost that much for our car insurance, and few of us even ever make a car insurance claim.  All of us use the health care system.

In the US, the average health care insurance premium in 2008 is $4,700 per person.  Not much of a difference from the Canadian costs.  That price only covers those insured (presumably those who are health enough to get insurance).  Millions don’t have any insurance.

This comparison demonstrates that our costs are very comparable to the American private health care system.  Is private health care any more efficient?  Further, we don’t have to fight with the insurance company for coverage when needed.  Did you ever deal with a car insurance claim?  Were they eager to volunteer services?  Likely not, they want to keep the claim as low as possible.  It would be the same with private health care insurance.  You would have to fight for tests and coverage as the private insurance wants to keep the claim low, and if they are lucky, you die while you wait for approval.

What the Canadian Health care system needs is commitment from all of us, especially our politicians.  When your car insurance increases, you grumble and pay it.  However, when health care costs increase in the form of tax, we punish the politicians.  We have to accept that costs increase, in the US private system, and in the Canadian public system.  You get what you pay for.  And as indicated above, we are getting value for our money.