York Simcoe Tory MPP Julia Munro
Credits: MIRIAM KING/QMI AGENCY
The real landmines waiting to explode are public sector pensions.
York Simcoe Tory MPP Julia Munro has been sounding the alarm recently on the unsustainability of those pensions.
Longer life expectancy, the number of people who now qualify for pensions and low interest rates have put many of the pension funds in peril, she said.
Some people are working for a shorter time than they're collecting a pension.
"It's quite possible that someone would retire after 26 years in the workforce and their life expectancy upon retirement could easily be another 30 years," she said.
Many public sector workers now retire in their 50s and longer life expectancies mean they often live well into their 80s.
"When these plans were set up in the '50s, people wouldn't anticipate that kind of life expectancy," she said.
A former teacher herself, Munro points out this isn't a vindictive campaign.
"It's just an issue that we're facing as we look at those demographic changes that have taken place in the last few years," she said.
She's done some number crunching: 79,000 people were on the most recent Sunshine list of people making more than $100,000 on the public payroll. Of those, 11,000 make $145,00 or more. Those people will retire on a $100,000 fully-indexed, defined benefit, cash-for-life pension.
Low interest rates mean many of those pension plans just aren't performing the way they have done in the past and the way they need to in order to keep the civil servants in the lifestyle to which they'd like to become accustomed.
Most teachers and other civil servants retire on a pension that's calculated on 70% of their last - and best - five years of pay.
Saskatchewan recently changed that provision so that pensions are now an average of career earnings.
Economist Don Drummond rang the alarm bells about the sustainability of public sector pensions in his report earlier this year.
Many funds have unfunded liabilities - including the Teachers' Pension Plan (TPP). The teachers' plan is increasing the contribution rate - from 8.9% in 2008 to 13.1% in 2014.
That means taxpayers have to increase their contributions as well.
The average teacher retirement age is 59 - and Drummond said the province should consider raising that age.
According to the TPP board's annual report, the typical teacher works 26 years and collects a pension for 30 years.
The vast number of baby boomers - the largest demographic ever - are now retiring.
Don't forget, this all happens at a time when 60% of Canadians don't have a pension and where increasingly there are fewer people in the workforce supporting more retirees.
In 2009, there was one retired person for every seven workers. By 2030, it's expected that ratio will skyrocket to one retired person for every four workers.
As for the Teachers' Pension Plan, Drummond suggested increasing the average age of retirement for teachers. He also said the government - as the employer - should reject further requests for employer funding increases to the massive $117 billion plan.
The government paid $1.3 billion into the lucrative plan in 2010/2011. That's a lot of dough coming out of the pockets of taxpayers who don't have pensions going into the pockets of those who do.
Multiply that by all the pensions of all public sector workers - cops, municipal workers, civil servants - and you're looking into a giant, defined benefit Greek-style bottomless pit of entitlement that will bankrupt us all if we don't get it under control.