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Cost of public sector pensions skyrocketing in region
WATERLOO REGION — Between 2008 and 2011 the cost of city employee pensions to taxpayers increased 31 per cent, prompting opponents to call for change.
Some say the pensions could bankrupt cities and aren’t fair to taxpayers trying to prepare for their own retirements but others defend the program and argue the system can be sustained.
City pension contributions for staff in Cambridge, Kitchener and Waterloo cost $46.6 million since 2008, excluding libraries, according to information cities provided to The Record.
Compensation, though more costly in dollars, increased 10 per cent.
“Is it fair for taxpayers to fund a pension for city workers when taxpayers do not have a plan of their own,” said Mike Magreehan, co-organizer of a forum about public pensions in Waterloo last week.
Magreehan and others argue it isn’t.
But members and officials say a $10 billion Ontario Municipal Employees Retirement System (OMERS) deficit is being managed by rate and benefit changes and that the pensions should be maintained.
“OMERS has no problem paying the premiums in the short term and the long term,” said Mike Robinson, OMERS manager of client services.
He said the deficit will be addressed within 15 years.
Cities must share the cost of OMERS contributions 50-50 with employees if they want to offer a pension plan. They can’t get out of the program unless all their members agree.
Fred Hahn, president of the Canadian Union of Public Employees, said instead of abolishing OMERS, the emphasis should be on achieving better pensions for everyone. “We don’t want pension plans just for our workers, we want good pensions for all of us.”
About 230,000 of OMERS’s 430,000 members belong to CUPE, including many employees of local cities.
The majority of most cities’ operating budgets pay for wages and benefits for their employees, including the City of Waterloo, which spends about 56 per cent of its budget on compensation.
Last year the retirement system there cost $3.3 million, an increase of 35 per cent and more than in Cambridge and Kitchener where costs increased 24 per cent and 33 per cent respectively.
“The numbers tell the story,” said Bill Tufts of advocacy group Fair Pensions for All.
Cities have limited control over OMERS, though they do have influence through the board that decides rates is made up of both employer and employee members.
They have more control over collective agreements with staff for wage increases
Coun. Karen Scian helped organize the OMERS forum.
“For six years we’ve been very aggressive with our agreements,” she said. “We were the first municipality to break the three per cent (per year increase) barrier.”
The average cost of a municipal employee does continue to increase, even as the number of full-time employees goes down.
The cost per employee for compensation, benefits and OMERS has increased the most in Kitchener, by 16 per cent to $77,640 last year.
In Waterloo it went up 11 per cent to $81,697. Waterloo was the only city to have more employees in 2011 than 2008.
In Cambridge the cost has gone up nine per cent to $81,789.
Public sector pensions
• $18,000: the average lifetime pension benefit for an OMERS member. The average member retiring in 2011 received about $28,000. They are eligible for additional bridge benefits, inflation protection and survivor benefits.
• $45,451,132: how much Waterloo spent on staff compensation excluding libraries between 2008 and 2011
• Two per cent: the decrease in staffing at the City of Kitchener from 2008 to 2011 — the equivalent of 30 full time staff
• Seven per cent: the increase in wages and salaries for the City of Cambridge between 2008 and 2011
• Two: the number of times employers and their employees have opted out of OMERS. Both were small employers with 10 members or less.
Source: Cities of Cambridge, Kitchener and Waterloo. Data excludes libraries.