Paige Desmond, Record staff -Sat Sep 22 2012
Expert says taxpayers must demand change on public pensions
KITCHENER — Pension expert Bill Tufts says citizens need to stand up and demand change from government on gold-plated pensions public employees receive.
Speaking to a Confederation Club meeting in Kitchener on Thursday, the head of the non-profit group Fair Pensions for All said taxpayers hold some responsibility for not demanding politicians take a hard line sooner against the growing costs of these pensions.
“To find the people at fault, we simply have to look into the mirror,” Tufts said. “You’re the ones who are going to have to make change.”
Last year, tax dollars paid for $36.7 million in pension contributions for municipal employees in Cambridge, Kitchener, Waterloo and the Region of Waterloo as part of the Ontario Municipal Employees Retirement System. That’s an increase of $5.2 million compared to the year before.
The fund was established in 1962 for local government employees in Ontario. Municipalities equally share pension contributions with employees. The pension fund dictates what cities pay as part of the agreement, which currently has about 263,000 members.
The fund has a shortfall of $7.3 billion, $3 billion more than 2011, which affects cities across the province.
Tufts said somewhere along the way things changed.
“(Before) working in the public sector meant that in exchange for a lesser salary, one would enjoy additional job security and a reasonable pension upon retirement,” Tufts said. “Somewhere along the way, public sector unions managed to negotiate bulletproof job security, salaries that far outstrip anything in the private sector and incredibly generous pensions.”
The shortfall prompted involvement by the Association of Municipalities of Ontario, which advocates for cities.
It’s getting involved in a provincial consultation on legislation announced in the Liberals’ budget speech to make sure measures to increase funding do not add to employer and taxpayer expense beyond what was already agreed to.
In November, the City of Waterloo will host a public workshop to talk about how the retirement system impacts cities.
The conversation will help form input the city will submit as part of a governance review, according to Coun. Karen Scian.
She attended Tuft’s presentation along with acting chief financial officer Karen Eskens and chief human resources officer Karen Boa.
Scian said she was tired of finger pointing and was ready to talk solutions, adding it may be awkward for city staffers but they recognize their role.
“They understand that it’s important,” Scian said. “They understand and they want to be part of it.”
Mike Magreehan, former chair of the citizens’ budget task force, will help present the workshop with Scian.
“It is time for the public sector to accept a pension plan that is the same as the private sector,” he said.
What public pensions cost taxpayers last year
Waterloo taxpayers paid $3.4 million last year, an approximate $300,000 increase.
Costs climbed $600,000 in Cambridge to $3.5 million.
Kitchener paid $6.2 million for staff pensions in 2010, which rose to $7.3 million last year and the cost is expected to hit about $8 million in 2012