The Ontario Liberals recently introduced legislation to create a mandatory government pension plan modelled after the Canada Pension Plan.
The Ontario government's proposal to supplement the Canada Pension Plan with its own compulsory pension plan is based on a series of faulty assumptions.
If Canadians ever wonder why it is so difficult to reform government spending, there's a simple reason: government employee unions.
A good example (if one can call it that) is the issue of growing government sector pension costs and the outright resistance from the unions to address the problem.
Some specifics. In January, Newfoundland and Labrador's auditor general Terry Paddon noted how unfunded employee pension benefits make up more than 60 per cent of that province's net debt and amounted to a $5.6 billion liability.
In Alberta, almost twice as many workers in the government sector possessed defined benefit pension plans in 2011 when compared with private sector employees. That might explain why so many government employees unions, from the Alberta Union of Public Employees to the United Nurses of Alberta, vociferously oppose modest pension reforms proposed by Finance Minister Doug Horner.
Pay and pensions are always no-win minefields for politicians but heres the problem when anyone thinks about that issue in isolation: it misses the massive price tag that exists for the entire public sector, of which political compensation, transition allowances and retirement benefits are only one component.
Politicians are part of a much larger public sector and the debate should always focus on this: what governments should or should not do (and from which the size of the public sector then flows); what is affordable for taxpayers; and private and public sector comparisons.
Like many of the other proposals floated by a variety of groups, the IRPP study suggests expanding mandatory savings by expanding the Canada Pension Plan (CPP). Similar to all the other proposals, this latest one is overkill for a policy issue that has seriously been overblown, and comes with a number of adverse consequences.