Public pensions erode essential services: CFIB

By Staff | August 22, 2012 | Last updated on August 22, 2012
1 min read

Enrolments in public sector pension plans are growing at double the rate of those in the private sector.

Canadians could face higher taxes and reduced government services as a result, says a new CFIB report.

“The public sector has grown rapidly over the past decade, becoming increasingly unsustainable,” says Ted Mallett, CFIB’s chief economist.

Read: Public pensions “unfair” to taxpayers

He says governments should reign in costs, bring public wages back in line with private sector norms, and push back the age at which full employee entitlements are earned. They should also move from a defined benefit to defined contribution approach.

There were more than three million members of public plans at the beginning of 2011, an increase of 26% since 2001. Private pension levels, on the other hand, remain flat.

But, total contribution levels are not the problem. CFIB research shows public plans are underfunded by more than $300 billion, despite the generous $10,000 put aside to cover costs each year.

Read: The new retirement plan (post-Budget)

“The costs of government pension plans are eroding the ability to deliver fundamental public services,” says CFIB president Dan Kelly. “For example, Montreal’s pension plan now eats up 13% of its operating budget, more than the amount devoted to public transit.”

This study is the second in a series of CFIB reports examining the problem of unsustainable pensions.

Read: Fiscal sustainability key to retirement staff


The staff of have been covering news for financial advisors since 1998.