Public pensions part of the problem

One of the leaders in the discussion on pensions in Canada is Catherine Swift. She is president and CEO, Canadian Federation of Independent Business (CFIB).
 
Today her letter to the editor was printed in the National Post. She is right on the money when she says Public Pensions Part of the Problem

 Ontario NDP Leader Andrea Horwath’s claim that pension plans like OMERS, the Ontario Teacher’s Pension Plan and HOOPP work well once again promotes the incorrect notion that if only we could have such wonderful types of plans to offer other Canadians all our problems would be solved. She neglects to mention that there is one and only one reason these plans work — because they are endlessly supported by massive and growing amounts of private sector taxpayer dollars. 

These are dollars that those private sector taxpayers do not have to put away for their own retirement. Public sector plans like OMERS and the OTPP are part of the problem, not part of the solution. These plans are invested in exactly the same stock and bond markets as are RRSPs and other plans.

For example, the OTPP lost 23% in the recent market meltdown — pretty much the same as what everyone else lost.  Yet did benefits get affected one iota? Of course not, as generous taxpayers are expected to pick up the slack like they always have.

There are indeed serious problems facing private sector retirees that need to be addressed, and one of the first steps must be cutting back on the private sector dollars going to rich public sector plans, and increasing public sector retirement ages (currently much younger than anyone else in the economy) so that private sector taxpayers are left with a few bucks to put away for their own modest retirements. There is no financial or social justification for our two-tiered, reverse-Robin Hood pension system.

The facts that she presents here were backed up in a report produced by the CFIB called the Pension Predicament  This report was on the first to recognize that the gap between public sector pensions and taxpayers retirement plans is unfair, unjustified and unsustainable.