Rapidly increasing public sector pension enrolments a ‘runaway train’
TORONTO, Aug. 22, 2012 /CNW/ – With enrolments in public sector pension plans growing at twice the rate of growth for private sector employment levels, Canadians could face higher taxes and reduced government services unless action is taken soon. That’s according to a new report, Public Sector Pensions: a Runaway Train? released today by the Canadian Federation of Independent Business (CFIB).
“Canadians have witnessed a rapid growth of the public sector over the past decade, all of which has made the public sector pension system even more unsustainable,” said Ted Mallett, CFIB’s Chief economist. “Governments must get serious about reining in their costs, by bringing public sector wages back in line with private sector norms, pushing back the age at which full pension entitlements are earned, and moving from a ‘defined benefit’ to ‘defined contribution’ approach to pension entitlements.”
At the beginning of 2011, there were 3.14 million members of public sector plans – an increase of 26.6 per cent since 2001 - while private sector pension levels remained flat. Total contribution levels are not the problem. CFIB research shows that public sector plans are underfunded by more than $300 billion, despite a generous $10,000 per year being put aside for the average public servant in employer and employee premiums.
“The escalating costs of government pension plans are seriously eroding the ability to deliver fundamental public services,” said CFIB President Dan Kelly. “The implications are starting to be felt. For example, the City of Montreal’s pension plan now eats up 13 per cent of its operating budget – even more than the amount devoted to public transit.”
Today’s study is the second in a series of CFIB reports that will examine the problem of unfair and unsustainable public sector pensions. Last year, CFIB launched the Pension Tension campaign to call for transparency of public sector pension liabilities and fairness for taxpayers. Since then, 50,000 small-and-medium-sized businesses have signed “action alert” petitions demanding public sector pension reforms.
To view the report in full, please visit www.cfib.ca
As Canada’s largest association of small- and medium-sized businesses, CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes direction from more than 109,000 members in every sector nationwide, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.
SOURCE: CANADIAN FEDERATION OF INDEPENDENT BUSINESS