Newspaper article The Canadian Press

Editorial Exchange: Pension Emergency Looming

Newspaper article The Canadian Press

Editorial Exchange: Pension Emergency Looming

Article excerpt

Editorial Exchange: Pension emergency looming

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An editorial from the Winnipeg Free Press, published May 10:

Canada's auditor general, Michael Ferguson, has sounded an alarm on the rising costs of public pension plans, warning the federal government may not be adequately planning for the long-term impact of economic and demographic forces on the plans. Further, Mr. Ferguson wanted finer detail from the government to assess whether the plans were sustainable; in other words, if the public purse could actually afford the government's obligations to the plans. The government said that information was confidential.

That is disconcerting. Ultimately it is the taxpayer who carries the obligation to fund what the government owes to ensure promised benefits to its public servants and retirees. Mr. Ferguson outlined some of the potential factors that will increase those costs.

Public servants are retiring earlier and living longer. This, combined with the current stretch of years of low interest rates and low returns on investment, means much is owed to keep plans fully funded on an ongoing basis. The federal government will be looking at dumping in a lot more money in future years, or changing the terms of the plans to nip expenses.

Mr. Ferguson pointed out if life expectancy of public servants increases by just one year, government's total obligation increases by $4.2 billion, or three per cent. Payment of that amount would be spread over a number of years, but it is an illustration of how dramatically the numbers can move. Annually, Mr. Ferguson projected, federal spending on pensions could go from an expected $3.3 billion in 2017 to $13.5 billion in 2050, or 1.6 per cent of total program costs.

The Harper government has responded its recent moves to increase public servants' share of their pension costs to 50 per cent, along with pushing back the normal retirement age to 65, will see substantial savings. …

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