Pension membership takes a heavy hit in private sector

JANET McFARLAND From Tuesday’s Globe and Mail 

For the first time, the majority of Canadians who have workplace pension plans are government employees, according to new data that highlight the growing disparity between private and public sector workers as the baby boom generation nears retirement. The recession, and in particular the massive job losses in factories that it caused, accelerated a long decline in pension plan membership in 2009. The number of private-sector workers with pension coverage declined by 2.1 per cent, Statistics Canada said, to just below three million.

That means that more than half – 50.2 per cent, or 3.03 million people – of the country’s pensioned workers are in jobs in the civil service or at government-funded institutions such as universities and hospitals. A decade ago, public-sector plans represented 46 per cent of all pension plan membership in Canada.

The numbers are likely to add fuel to the debate about the country’s retirement system. While job losses in hard-hit sectors have helped to drive down the number of employees with pension plans, many companies have also looked to cut costs by eliminating so-called defined benefit plans – which pay the worker a guaranteed income upon retirement – for new employees at least.  No such trend is evident yet in the public sector, although there is political pressure to do something to curb the wage bill at the federal and provincial levels as governments seek to cut billions from their fiscal deficits. About 80 per cent of public-sector employees have a workplace pension plan, while just 25 per cent of private-sector employees do.