TORONTO, Public sector pensions are no longer sustainable for taxpayers. At Fair Pensions for All we have been concerned about the fairness and long term solvency of the current defined pension system for public sector employees.
With skyrocketing contribution rates and increasing shortfalls, pensions have reached their breaking point.
The economic reality of the past several years has changed the dynamics of retirement savings in Canada. Taxpayers can no long afford to provide for the gold-plated retirements of government employees while at the same time their own retirement nests eggs suffer.
Pension apartheid is what some commentators are starting to call the great divide.
In Canada, the number of private sector employees in defined benefits pension plans has rapidly dropped to 1.5 million in 2011 from 2.1 million in 2006. At the same time, public sector pensions have seen increased membership rising to almost three million
The private sector defined benefit (DB) pension plan, an obligation of employers to pay employees an income in retirement usually based on a percentage of salary, has burdened and influenced the restructuring of entire industries from auto and steel to railroads and airlines.
It is bad enough that 60% of Canadians have no pension at all, but voluntary programs, such as the RRSP, have had disappointing participation rates. In any given year, only about 26% of tax filers contribute to one.
One in five Canadians is a member of a public-sector union and 84% of them have DB pension plans guaranteed by taxpayers. Even these pension “haves,” who typically receive 70% of their best five years’ salary as income in retirement, indexed to inflation, may not be safe
A shrinking workforce makes change unavoidable even as the average public-sector worker retires at age 58 and the average private-sector worker at 62
The provincial government has capped teachers pensions at $2.8 billion a year which is almost 14% of the total education budget for elementary and high schools. Teachers are locked into paying 13% of salary a year for pensions and at the same time threatened with a loss of up to 30% of their retirement benefits through the loss of cost of living raises.
The current system is not fair to taxpayers, today's public sector employees or to future generations.
Bill Tufts, Fair Pensions For All, founded in January 2009, our goal is to promote an honest and fair analysis of our pension system; to expose abuse and waste within the system; to develops and promote new ideas and concepts on pensions based on fairness for all.
We maintain that it is every Canadian’s right to receive sufficient income in retirement to afford an acceptable quality of life.
