Public pensions “unfair” to taxpayers

Do your clients receive public-sector pensions? If so, the pension freeze may not be their only worry.

With Canadians potentially on the hook to pay an extra $9,000 for the unfunded liabilities of public pension plans, taxpayers and business owners are demanding structure reforms, says a report by the Canadian Federation of Independent Business (CFIB).

“The privileged status of public sector pensions has resulted in a dangerous complacency on the risks they pose to future pensioners and taxpayers,” says Ted Mallett, CFIB’s chief economist.

He adds, “Since the state of disclosure of public sector plan financials is alarmingly low, nobody knows how big the problem may become.”

The unfunded shortfall for the pensions exceeds $300 billion, according to Statistics Canada and Public Accounts, despite the extra $1.3 billion yearly contributions made by taxpayers between 2001 and 2010.

Allowing pension managers to use overly optimistic rates of return has contributed to the ongoing issue.

“For a long time, the public sector pension scheme has been unfair to taxpayers and small business owners,” says CFIB president, Catherine Swift. “The plans are structurally unbalanced and in need of immediate reform.”

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.