Op-Ed: Pension crisis in the spotlight

November 12, 2011
By

Digital Journal

Apr 26, 201

The Pew Institute released an updated report on the state of pensions in the United States. The problem is the same in Canada but goes unrecognized by taxpayers and politicians.

The Pew Institute closely follows what happens with public sector pensions in the United States. Today on the Digital Journal they released information about their latest report.
Since the last report in early 2010 government at all levels including the federal government, state government and municipal governments have been pumping huge contributions into the plans for public sector employees. Pew estimates that despite taxpayer contributions of $72 billion in 2009 there are still huge shortfalls for the pension and health benefits owed to retired government workers.
The Pew report is an important report because it is starting to create a benchmark for pensions and politicians, taxpayers and union members can follow to see what the trends are.
In Canada the same trend in pension funding is occurring however, it is falling under the sights of most Canadians for a variety of reasons. Politicians don’t want to touch the issue, unions have no remorse about plundering taxpayer pocketbooks and most of us can’t understand the details.
Ontario is the biggest recipient of taxpayer largess and it’s pension funds receive a significant portion of taxpayer contributions into Canada’s pension plans. In the past year, the top 3 pension plans in Ontario received $3.4 Billion in taxpayer contributions, The Ontario Teachers Pension Plan was first with just short of $1.4 Billion in taxpayer contributions, followed by OMERS for municipal employees with $ 1.12 Billion and The HOOP plan for Ontario hospital employees which saw $921 million collected in taxpayers money.
Canada’s pension funds are becoming giants and this is a good thing for the employees of these plans. Teachers now has assets of $107 Billion, OMERS has $53 Billion and the HOOP has saved $35 Billion. This $195 Billion has been accumulated for the benefit of about 952,000 employees and retirees. This contrasts with the Canada Pensions Plan (CPP) that has saved $140 Billion for about 18,000,000 working Canadians.
It is easy to see that on a per person basis Canadian taxpayers have funded far more into public sector plans for a few government workers than they have funded into their own plans. For example, the Teachers plan has saved over $360,000 for each worker and retiree. This contrasted with the average RRSP contribution in 2010 estimated by BMO to be $4,700. The median contribution was even lower at around $2,700.
The average Canadian RRSP contribution of $4,700 was the same amount taxpayers funded into the Ontario teachers plan for an average of $4,700 per employee. Most Canadians have an RRSP that is probably way short and will be struggling to catchup but Teachers tells taxpayers that they will have to fork over another $17 Billion make up the shortfall that exists in that plan. Another $57,000 per employee on top of the current annual contributions.
Oh by the way OMERS is $9 Billion short and guess who will be making up that shortfall as well? We have not even touched on the university, colleges, Ontario Hydro and OPG shortfalls which combined add another significant debt onto taxpayers.
It is a common refrain that there is no problem with pensions in Canada. However, there are only 3 states with higher required pension contributions that Ontario. They are California, Illinois and New Jersey.
In it’s release the Pew Institute stated that “in many states, the bill for public sector retirement benefits already threatens strained budgets, and is competing for resources with other critical needs, including education, infrastructure and health care,”. No one in Canada has woken up to the problem yet, but the winds are blowing and change is on its way.

Read more: http://digitaljournal.com/article/306017#ixzz1dVYkpzwb

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