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Editorials

Winnipeg Free Press - PRINT EDITION

Scale back public pensions

Posted: 08/7/2013 3:16 AM | Comments: 0

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The idea that the pension plan for public-sector workers in Manitoba is dangerously underfunded is misleading if anyone assumes it means the plan is at risk of folding, or that employees might not get all the benefits they were promised.

The endless resources of taxpayers means every civil servant now and in the future will get his or her full benefits, regardless of market rates or economic conditions.

That certainty is the chief benefit of working for The Man.

Taxpayers are liable for $2 billion in unfunded pension liability today, which is better than it was five years ago, when the liability was $4.45 billion. The decline is attributable to a $2.5-billion loan the province negotiated, which is debt no matter what its purpose. Future shortfalls will be covered the same way.

The ability of the state to support golden benefits for civil servants is increasingly recognized not just as unsustainable, but unfair to those who toil on the other side of the hill, where pension plans and benefits are poorer or non-existent.

It's why some provinces have introduced more manageable plans that respect the limited resources of the taxpayer, while asking workers to assume a higher share of the risk.

Saskatchewan introduced a defined-contribution pension plan for its civil servants many years ago, which establishes contributions, but not benefits. Manitoba's defined-benefit plan guarantees a set payout for life.

New Brunswick has also introduced a shared-risk model that reduces the liability for taxpayers, while the federal government recently raised the retirement age for civil servants to 65 from 60.

Federal bureaucrats used to be able to retire with an unreduced pension at age 60 or once they reached 55 with 30 years of service, while Ontario negotiated an end to cost-of-living increases with teachers.

Everywhere, it seems, governments are looking to scale back the benefits of their workers. Not in Manitoba, however, where the NDP government negotiated a pay freeze a few years ago in return for enhanced benefits and other inducements.

It's time to consider how to reduce the province's generous plans so they are affordable, as are some other jurisdictions, and not grossly out of proportion to the experience of other Canadians.

No one should lose the benefits they were promised when they signed up for government work, but the province must consider following the lead of other jurisdictions by introducing a more reasonable plan for new employees.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition August 7, 2013 A8

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