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article imageOp-Ed: Ontario's Sunshine List is not what it seems

By Bill Tufts     Mar 18, 2011 in Politics
Over the next few days the Government of Ontario will release the Sunshine List. This is the list of employees who earned over $100,000 last year.
The Ontario Sunshine List will be released later this months and there will be lots of ooh-aah moments as well as scouring the lists for familiar faces.
When the Sunshine List was created in 1997 it was designed as away for the public to help keep track of what was happening at local governments and organizations to help hold those governments accountable to the taxpayer.
The list has failed to keep up with the times and needs to be revised. There is a large hidden cost in the list that fails to disclose the true cost to taxpayers. The list includes the "taxable" benefits portion of a public sector employee's pay packet. Not included in the list are "non-taxable" portions of compensation.
Non-taxable items include the cost of OPEB's or Other Post Employee Benefits. These have been ratcheted up as unions work with politicians to find ways of increasing the pay packet outside of "taxable" benefits.
The cost of the OPEB's and non-taxable items add about another 40% onto the compensation package of Ontario public sector employees.
Some of these costs are paid out annually and some create a future liability for taxpayers. Every year for example retiring civil service workers receive a payout of their accumulated sick holiday pay and vacation pay. Most contracts stipulate a payout formula for these payouts at the termination in the employee's contract. For example, a cash payout the equivalent to 8 weeks vacation.
Pensions are also included in the non-taxable portion of compensation.
The 2009 annual Executive Compensation report for the OPG Ontario Power Generation, shows how total compensation work in combination with the Sunshine List. The 2009 list discloses the President and CEO's compensation as $2,150,115.69, with $2,632 in taxable benefits. Here is what was actually paid in compensation.
Salary $ 860,000
Bonus 898,700
Pension value 1,010,000
All other 683,246
Total $ 3,451,946
So if you consulted the list, your estimate on his annual compensation would fall about $1.3 Million short.
Of course, this is not a typical average public sector employee but it illustrates the reporting dynamics that apply. The average $100,000 employee on the Sunshine List accumulates health benefits, sick pay credit, vacation pay credit, pension and retiree benefits. The total value of these other "non-taxable" benefits are about $40,000 more.
The Value of Pensions
It is important to understand how pensions work.
The payout on pensions is a function of the final salary of the employee based on the accrual rate. Almost all public sector employees are entitled to a full pension after 35 years of service except for protection services (police and firefighters) who are eligible after 30 years.
The accrual rate is 2% for each year of service. This means that for every year worked they accumulate another year's credit. Pensions are targeted to provide 70% of the final three or five year's final salary.
So when you read the Sunshine List this year, read between the lines
Bill Tufts is the curator of Fair Pensions For All
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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