Pension gap ‘astounding’ between private, public sectors: Canadian Taxpayers Federation

CTF calling on government to get rid of DB plans, switch to DC
|hrreporter.com|Last Updated: 09/06/2012

The Canadian Taxpayers Federation (CTF) has released new data showing the large gap between government workers’ pension benefits and private sector employees. The CTF called on governments to freeze and convert their “unsustainable” defined benefit (DB) pension plans to less costly, defined contribution (DC) plans.

Statistics Canada data shows that 87.1 per cent of government employees have workplace pensions, up from 75.5 per cent in 1977. Outside of government, just 24.4 per cent of workers have workplace pension plans, down from 35.2 per cent in 1977.

Types of pensions employees receive

Government employees

Private sector employees 

Defined Benefit

81.9%

12.7%

Defined Contribution

4.2%

6.8%

Other

1.0%

4.8%

No Pension Plan

12.9%

75.7%
















“Not only are government employees more likely to have workplace pensions, they typically have the ‘golden’ type — defined benefit plans,” said CTF federal director Gregory Thomas. “Considering most defined benefit pension plans in the country are running a deficit, it’s time for the government to follow the private sector and get out of them.”

The average government employee saw $8,734 go into their pension plan last year while everyone else saw an average of just $4,092 go into their pension plan or registered retirement savings plan (RRSP), said CTF.

Contributions

Total deposits by employer and employees*

Number of employees in Canada

Per employee Contribution

Government employees

$31.3 Billion

3,587,800

$8,734.18

Private sector employees

$56.2 Billion

13,740,800

$4,091.74

* Note: Deposits for the private sector include total nationwide RRSP contributions (estimated $33.3 billion based on average of last five years). Source: Statistics Canada.

“Government employees have twice as much money going into their pensions than people in the private sector, and yet, there are still massive shortfalls in their pension plans. What’s worse is that those in the private sector, who have a fraction of the pension savings, are being forced by their governments to backstop these rich government pension plans,” said Thomas. “After scaling back their own plans, politicians across the country need to begin the work of fixing government workers’ plans.”

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