OTTAWA — Prime Minister Stephen Harper says any possible changes to public sector pensions will be fair to both federal employees and taxpayers, but he maintains no final decisions have been made. Heading into the spring federal budget, unions are fearing thousands of job cuts. But they also worry the government may reform civil-service pensions following some estimates the federal plans face a shortfall of more than $200 billion. Harper said Friday that a story in the National Post — which explained the government is considering restructuring federal public-sector pensions — is simply speculation at this point. The prime minister noted the government already has changed the federal pension plan — seen by many observers as far more lucrative than private-sector plans — to have employees contribute more than in past years. "Our intention is to ensure that our pension regimes are fair, for our public servants, and also for taxpayers," Harper, in French, told reporters in Edmonton, where he was announcing a work program for Canadian veterans and reservists. "I can say that no decision has been taken." The federal public-sector pension plan has about 561,000 members, including approximately 317,000 active workers, 180,000 retired employees and close to 60,000 survivors (when a member dies, the plan provides income for some eligible survivors and beneficiaries). Federal civil servants currently contribute 35 per cent of pension service costs, but that rate will increase to 40 per cent next year, with the government (as the employer) contributing 60 per cent. However, many public-sector pension plans in the provinces have a contribution split of approximately 50-50. A recent report released by the C.D. Howe Institute said federal public-sector pension plans are $227 billion in deficit — $80 billion more than the government's own estimates. The assumed rates of return the federal government uses to calculate its liabilities are well above anything currently available, according to the institute. If left untended, the matter could leave ordinary taxpayers on the hook to bail out rich civil-servant plans, the report warned. If the underfunding had been reported as part of the federal debt, the report said, it would have wiped out much or all of the federal surpluses reported from 2001 to 2008, and it means the deficits since then were much larger than reported. Linda Duxbury, a professor in the Sprott School of Business at Ottawa's Carleton University, who specializes in workforce change, said many pension plans in both public and private sectors aren't sustainable. Lucrative defined-benefit plans were created when people didn't live long past retirement age, she noted, and Canadians are now regularly collecting pensions for decades. "It's part of the reason our fiscal house is not in order for a lot of organizations," Duxbury said. "They've got to do (the changes) now to stave off even bigger earthquakes later on." She believes ultimately, the government will have to restructure federal pensions to address the shortfall, but also consider increasing the qualifying age for Old Age Security to 67 from the current 65, as Canadians live and work longer. "We're going to see some major changes not just to pension, but to retirement age," she said.
No comments:
Post a Comment