The current “defined benefit” system that dominates public pensions is also becoming increasingly unaffordable and unsustainable"
Fair Pensions For All Supports PC Party call for Pension Reform
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LONDON: Today, the PC Party of Ontario released its white paper called: Paths To Prosperity: Sustainable Retirement Security. Fair Pensions For All was privileged to be a part of its production, and supports the initiative.
Although there are many problems with our current pension system, the main overriding concern is fairness. It is not a fair and balanced approach to have hard working private sector Ontarians, who cannot afford to save for their own retirement, to not only pay for the gold plated Public Sector Pensions but also, bail them out, when the demands of the system are unmet. As the PC Party rightly points out:
“The significant risk is that unfunded liabilities of public pensions will force taxpayers, many of whom have no pensions, to pay billions of dollars in extra taxes to top up the pensions of those who are much better off”.
We need to do something to fix this inequity. The PRPP is a good start.
Most private sector businesses cannot afford to pay for a pension for its employees. Government cannot help, as they can’t even afford the pensions that they are currently on the hook for. We must look to another plan and PRPP could be that plan. Essentially, PRPP is a pooled plan that allows the employee to take their pension from job to job. This plan would have both the employer and the employee contribute a small amount to the plan. Businesses would benefit by being able to offer a pension plan to attract employees that they would otherwise not be able to afford. The employees, who on average save only $60,000 for retirement, would be able to have something saved for their golden years. Although this will help, it is not the end of the problem.
Fair Pensions For All was encouraged by what the PC Party had to say about defined benefit pensions. The PC Party in their white paper correctly points out that:
“The current “defined benefit” system that dominates public pensions is also becoming increasingly unaffordable and unsustainable”.
We must get away from the defined benefit public sector pension system. This system is not only unsustainable but also, will either result in default in payments to our retired public servants or perpetual tax increases to service the shortfall. There is no defined benefit pension plan that is sustainable long term. We are encouraged that the PC Party is suggesting that the government needs to look at instituting defined contribution pension plans. The PC Party also suggested that clarification about who pays for the unfounded liabilities is necessary. We agree. No taxpayer should have to pay for a public employees salary, benefits, pension and pension shortfalls. Surely, the private sector taxpayer should be allowed to keep some of their hard earned money for themselves.
While the PC Party’s plan doesn’t address all of the issues that Fair Pensions For All would like, this is a significant start, and we applaud the party for its efforts.