(Reuters) — Ontario's minority Liberal government has said it struck a deal with three major public sector pension plans to freeze contribution rates, a move that could help eliminate its $14.4 billion deficit in five years.
The announcement may help ease concerns among investors and debt-rating agencies that Premier Dalton McGuinty's surprise resignation and his decision to halt the legislative session would stall the province's drive to tackle its budget shortfall.
The agreements, signed with the Ontario Public Service Employees Union Pension Plan, Healthcare of Ontario Pension Plan and Colleges of Applied Arts and Technology Pension Plan, will freeze contribution rates for five years, except in exceptional circumstances.
Finance Minister Dwight Duncan said the pension changes should save up to $1.5 billion over the next few years.
Ontario Teachers Pension Plan, the largest single-profession pension administrator in Canada, was notably missing from the deal. The province's teachers are taking the Ontario government to court over legislation that aims to freeze wages and benefits and take away their right to strike.
Duncan told reporters that the teachers, included in the estimated $1.5 billion in savings, would be subject to pension freezes through legislation.
In its autumn economic statement last week, the government of Ontario, reduced its deficit target slightly to $14.4 billion from $14.8 billion ($14.91 billion) in April. It kept its 2013-14 and 2014-15 deficit forecasts at $12.8 billion and $10.1 billion, respectively.
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