Canada’s Hidden Unfunded Public Sector Pension Liabilities

[Anonymous]

The issue of unfunded pension liabilities will probably come to a head before my baby graduates high school.

We are losing front door mail delivery in Canada, but the big story is why we are losing it.



Pension costs.



That's right, those of us who still get mail to our door will lose this service due to the huge cost of the pensions Canada Post needs to pay out.



This is the big story here — not that we are losing a particular style of mail delivery, but why.



Canada Post has a $6.5 billion hole in its pension plan. That means they owe money to pensioners or current employees that they just don't have and that is a big driver of these cuts.



Anyone upset about losing postal service to their door should be upset at the cost of the pension plans on offer to postal workers, the inability of past negotiators to say no and the bad planning that saw this huge, unfunded liability grow.



This unfunded liability means taxpayers will have to bail out Canada Post, either through service cuts or, if that doesn't work, a bailout down the road.



Unfortunately, Canada Post is not alone.



Across the public sector, lavish pensions, the kind no one in the private sector gets, are putting the future of government services at risk.



Canadians have fewer children than 40 years ago when I was a tot and many of these pension The Canadian Federation of Independent Business estimates public-sector pension plans across Canada could be on the hook for as much as $300 billion they do not have.



In the future, we will have more retirees and fewer workers.



arrangements were becoming solidified.



We also used to have five workers for every one retiree; soon it will be two to one.



We won't have enough money to pay for the pensions promised.



What happens then?



Well, look to Detroit for an idea.



Retirees in Detroit were promised pensions the city could not afford and eventually the city went broke.



The city has slashed services and the retirees who were relying on those pensions now face seeing their monthly payments cut as the city restructures.



We need pension reform in this country before the same thing happens.



It might sound cold to argue that we need to cut pension benefits, but what is more compassionate?



Is it promising what can be paid out so people can plan for their future with some certainty, or promising more than we can afford and then granny's pension is cut in half when she is 75 and no longer able to work to supplement her income?



It also isn't fair to ask private-sector workers, who on average earn less than the civil servants they support through taxes, to also pony up for the very generous pensions they won't get themselves.



Most private-sector workers don't have pension plans, they save on their own — or at least they should.



Those who do have pensions likely have defined contribution plans rather than the defined benefit plans so many government workers have.



In defined contribution you, the worker, put in so many dollars, the employers matches it and the money is invested — by you as your retirement fund.



This is what the feds, the provinces and municipalities should be moving toward and they should do it now before it is too late and granny gets cut off in her golden years.

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