65 billion dollars missing from federal pension plan
Posted Nov 12, 2010 06:23:10 AM.
This article is more than 5 years old.
The shortfall for the federal pension for public sector workers may be $65-billion more than originally thought.
The figure is from a new study from the C-D Howe Institute.
While the government is pegging its unfunded liability in the plan at around $143-billion, the institute found the number is closer to $208-billion.
The problem is if the pensions are at the stake, the taxpayer is the one to foot the bill.
With the pension structure as it is public employees only contribute a third of what they take out, while the rest is covered by the government.
The president of the institute tells The Citizen the feds have used improper accounting methods which has caused them to drastically undershoot the amount they’ll have to pay out.
There have been similar problems in some European countries. The shortfall forced the governments in Spain, Ireland and Greece to scale back on public-service compensation packages.
It won’t be an easy turnaround in Canada, just to keep pace and stop the gap from growing, contributions in the latest fiscal year would have had to be almost double what was actually paid in.
There does appear to be two solutions. The first is to change the accounting structure and model it after one used in the private-sector.
The second is to make public servants responsible for half the cash in the pension plan, not just one third.
