High interest rates and more retirees to blame for Ontario teachers' pension shortfall
Despite a $14.1-billion return on investments, the Ontario Teachers' Pension Plan is facing a shortfall of $31.9 billion, up from $19.4 billion last year.
The plan administers the pensions of the province's 163,000 elementary and secondary school teachers and 101,000 retired teachers.
The CEO of the plan, Claude Lamoureux, is calling for benefit cuts and a hike in member contributions to prevent the shortfall from getting even worse.
Last year, the plan paid out $3.6 billion in benefits, while contributions (from active teachers, the Ontario government and other employers) totalled $1.6 billion. Future pension benefits were 77 per cent funded, down from 84 per cent.
Falling interest rates and increasing numbers of retirees are to blame for the shortfall. In 1990, there were four working teachers per pensioner, but now that ratio is 1.6 to one.
The Ontario Teachers' Pension plan cannot make changes to the plan. That responsibility falls to the Ontario government and that Ontario Teachers' Federation (OTF), which set benefit and contribution levels.
The government and the OTF are expected to file a plan with regulators later this year to address the shortfall. While OTF president Marilies Rettig told the Toronto Star that a contribution increase will be necessary, the OTF doesn't plan to decrease benefits at this time.
The plan administers the pensions of the province's 163,000 elementary and secondary school teachers and 101,000 retired teachers.
The CEO of the plan, Claude Lamoureux, is calling for benefit cuts and a hike in member contributions to prevent the shortfall from getting even worse.
Last year, the plan paid out $3.6 billion in benefits, while contributions (from active teachers, the Ontario government and other employers) totalled $1.6 billion. Future pension benefits were 77 per cent funded, down from 84 per cent.
Falling interest rates and increasing numbers of retirees are to blame for the shortfall. In 1990, there were four working teachers per pensioner, but now that ratio is 1.6 to one.
The Ontario Teachers' Pension plan cannot make changes to the plan. That responsibility falls to the Ontario government and that Ontario Teachers' Federation (OTF), which set benefit and contribution levels.
The government and the OTF are expected to file a plan with regulators later this year to address the shortfall. While OTF president Marilies Rettig told the Toronto Star that a contribution increase will be necessary, the OTF doesn't plan to decrease benefits at this time.
