Did We Really Need The AG To Tell Us This?

No Party Affiliation
Taxpayers on the hook for outdated, ballooning government pension plans, AG warns

Canada's auditor general has put his official stamp on warnings federal public service pension plans present a serious threat to the government's financial position thanks to low investment returns, a growing pool of retirees who live longer and poor overall management.
Groups such as the C.D. Howe Institute have been warning for some time the generous pensions career civil servants receive aren't sustainable.
Now Auditor General Michael Ferguson's spring report, tabled Tuesday, says deficits of the three biggest plans (covering the public service, armed forces and RCMP) are mounting, forcing the government to make special payments to maintain their solvency.
Ferguson also criticized the way the plans have been supervised, saying no single entity is exercising overall responsibility for them on the government's behalf. The current framework doesn't require the government to assess the plans' sustainability.
While other aspects of the auditor general's report covering things such as prison overcrowding and aboriginal policing are important, the implications of the pension plans' problems are huge for taxpayers.

The report says pension obligations are the government's second-biggest financial liability behind market debt, totalling $151.7 billion as of March 2013. Pension assets totalled $72.2 billion as of that date.
Like almost all pension plans, public-sector plans began running into trouble in the early part of the last decade as sustained low returns drove them into deficits. Regulations forced many companies to make special payments to ensure obligations to retirees were met.
The auditor general's report notes the government plans had funding deficits of about $6.5 billion over the last three years, requiring Ottawa to make $741 million in special payments last year and $1 billion over the last two years.

A lot of companies have restructured their pensions, moving away from costly defined-benefit plans that put most of the burden on employers to defined-contribution plans that place more of the risk on the workers.
The Conservative government's 2012 budget included changes aimed at slowing down the red ink, including raising the minimum retirement age for newer hires by five years (current public servants with enough years on the job can retire at 60) and boosting employee contributions to 50 per cent. Ferguson said the government estimates the changes will save taxpayers about $2 billion by 2017-18.
But as The Canadian Press noted, the C.D. Howe Institute's report found the changes had not done enough to put public-sector plans on a more equal footing with their private-sector counterparts.

The problem is exacerbated by a lack of centralized responsibility for determining the plans' sustainability, Ferguson said.
"Although we found that the entities we audited have carried out their responsibilities under the law, no one is responsible for carrying out a regular and systematic assessment of whether government of Canada pension plans are sustainable over the long term," Ferguson said, according to CP.
"Pension plans are operating now in an environment where interest rates are low, and plan members are living longer. It is therefore important that public sector pension plans be designed and managed in a way that considers not just present circumstances, but also protects the interests of current and future employees and taxpayers."
Without changes, the auditor general warned the government's share of plan benefit expenses would continue growing, affecting how much money Ottawa has to spend on other public priorities.
Ferguson said the government has accepted several recommendations his report makes to improve co-ordinated oversight of public-sector plans and to periodically assess whether they're sustainable, making changes if necessary.



Ferguson said the government has accepted several recommendations his report makes to improve co-ordinated oversight of public-sector plans and to periodically assess whether they're sustainable, making changes if necessary.

Show of hands, who thinks that will gain any traction? Yeah, that's what I thought.
Now that the government has proven The Big Lie (that if we didn't have interminable immigration then we could have no pensions to look forward to) to be exactly what it is - maybe it's finally time to quit ignoring the elephant in the room, which happens to be that sacred cow of immigration, and hack it down to an infrastructure-manageable pace: perhaps 1000 people per month instead of the insane high rates we've seen of up to 1000 people per day. How about a sane immigration policy with an eye to meet whatever Canada's optimum population is determined to be and then shut it down to perhaps a refreshing trickle of 1000 people per year or so.
no new posts