Public service pensions putting economy at risk, critics say

(QMI AGENCY FILES)

(QMI AGENCY FILES)

Michael Aubry, QMI Agency

, Last Updated: 3:14 PM ET

OTTAWA - Although new public service pension reforms are a step in the right direction, some critics say the retirement benefits are still light years ahead of most offered in the private sector and risk crippling the economy.

New legislation would push back the retirement age of new federal civil servants and make all civil servants pay half the contributions to their pensions.

Dan Kelly, president of the Canadian Federation of Independent Businesses, says the reforms don't go far enough.

"While it's a fairly significant step forward for the federal government to admit there is a problem and to take some steps towards fixing it, public servants are still on a different planet when it comes to average Canadians, but that planet is now perhaps a little closer to Earth," he said.

In Canada, 80% of small businesses can't afford to offer pension plans to their employees, leaving over half of Canadians to fund their own retirement.

Kelly said the government must continue to try to bring public service pensions in line with those available in the private sector.

Funding those generous public service pensions is leading Canada into massive debt similar to the European crisis, explains C.D. Howe Institute policy analyst Alexandre Laurin.

Recent data show Canada's unfunded liability — the money it would take to pay out the pensions of about 450,000 public service employees — would cost taxpayers nearly $143 billion.

But weighing that liability at fair market value, Laurin said, puts the debt closer to $208 billion because the government simply doesn't have the money close at hand to pay off a fair chunk of its liability.

The Public Service Alliance of Canada argues pension liabilities are stretched out over several decades as more money comes into the plan, and shouldn't be judged by their solvency.

Yet as baby boomers retire and start collecting their pensions en masse, the strain is increased.

Laurin said the problem is compounded because retirees are living longer, often collecting pensions for 25 to 30 years.

Kelly said that puts an unfair burden on taxpayers.

"There are still huge holes in the federal civil service pension plan that need to be funded," he said. "That's going to come from taxpayers who won't have workplace pensions and will be shovelling even more cash in the future to bail out a system that is in trouble."

He said there may come a day of reckoning when Canadians refuse to delay their own retirement to pay for civil servants to retire earlier.

"It still seems that there is one recipe for us unwashed Canadians and another for the delicate flowers that work for government, and that doesn't seem fair," he said.

mike.aubry@sunmedia.ca

Twitter: @ottawasunmaubry


Videos

Photos