As budget time – and elections approach for all levels of government, there is a debate curiously missing from political forefronts – that being the rising ecomonic threat posed by unfunded public pension funds.
Any recent discussion about the issue has focussed on Canada Post’s unfunded pension liablity, currently 6.5 billion dollars.
But that is only the tip of the iceberg, as years of generous wage agreements in the public sector have resulted in an unfunded shortfall for public pension plans across the country likely in excess of $300 billion. That works out to $9,000 for every man, woman and child in Canada.
These taxpayer liabilities rarely make headlines, but the time is rapidly approaching when billions of dollars must be added to government budgets to pay the annual pension payouts of a retiring baby boomer generation.
That will get the attention of the vast majority of those saddled with that $300 billion public service pension liability- the private sector workers, two-thirds of whom don’t have any kind of employer pension plan.
It’s time our politicians – and those on both sides of the pension equation – began serious discussions about conversion of these gold plated pensions into a form of the private sector’s average pension plan – the “defined contribution” plans that determine payout based on accumulated value of invested funds.
It’s not going to be easy – or popular – for governments to move in this direction, but the status quo hasn’t been an option for many years.
We simply can’t afford to move increasing amounts of tax dollars from social programs like health care, to benefit pension plans that long ago lost any connection to financial reality.