Public sector pensions unsustainable and unfair - Canada’s pension tension
Canada’s pension tension
Canadians continue to be divided into haves and have-nots when it comes to retirement. Most of us save for our own retirement, while the 20% who are lucky enough to work for government are likely to enjoy rich benefits at taxpayer expense. The facts:
- Public sector wages: already paid $19 billion more every year than if they were paid at private sector norms.
- Federal public servants: until recently federal public sector workers paid only about 37% of their pension costs – but, thanks to CFIB’s lobbying, their share is now increasing to 50% by 2017- but taxpayers pay the rest. Estimates show that the federal public sector pension fund is underfunded by between $150 and $230 billion. (There are billions more in unfunded liabilities at the provincial and local level as well as other public sector institutions.)
- Early retirement: full pensions and extended benefits only exist in the public sector. Many civil servants retire before the age of 60. CFIB lobbying has changed this policy for new hires starting in 2013 who will be expected to work till the age of 65. Governments even top up CPP/QPP for those retiring early.
- Mandatory hike in CPP/QPP premiums: union leaders want to double these by hiking premiums by 60% for employees and employers. This tax increase will kill jobs. If benefits double, all employees and employers would each pay an additional $1,300 per year. Small business owners and the self-employed would pay $2,600 each!
- What a hike would mean for you: while the idea of increased CPP benefits sounds great, what isn’t mentioned is that this benefit wouldn’t be fully in effect for 40 years!
Are you part of the public sector workforce? Your retirement may not be as secure as you think:
- As most government pensions have massive shortfalls, are you certain that benefits won’t be cut when you retire?
- Retired civil servants in Europe and the US are actually having their pensions cut – some as much as 50%.
Please note that CFIB is not calling for changes to past benefits that have already been earned. We want governments to make good on all commitments, but without passing a giant future bill to private sector workers and small business owners.