Ontario’s Budget: True pension costs finally revealed

Extrait de: Ontario’s Budget: True pension costs finally revealed, By Colin Busby and Alexandre Laurin, Financial Post,   Mar 27, 2012

Annual cost of public pensions is tripling

The Drummond report contained a key observation that would improve the province’s fortune with credit raters: increased transparency and better reporting of public-sector pension plans’ obligations and expenses.

By looking at Ontario’s public accounts, it is difficult to locate and appreciate the real cost of public servants’ pensions for taxpayers.

Taxpayer contributions to these plans have also been opaque.

Gardons le peuple dans l’ignorance pour mieux l’abuser (1)


As a first, the 2012 budget shows the rapidly growing historical and projected annual pension expenses for the largest public-sector pension schemes. This opens a window into the true costs of these defined-benefit plans. The cost of these pension arrangements is mounting at an alarming rate — the annual cost of these plans will nearly triple from 2008-09 to 2014-15.

The Drummond commission recommended that Ontario go even further: It encouraged the budget to show sensitivity projections around future rate of return assumptions, in case investment revenues fall short of expectations. The point is that taxpayers’ exposure to the huge risks of having to come up with a large pension funding bailout does not appear on the government’s balance sheet.

C’est exactement, ce que j’ai fait dans le carnet Incidence financière de la dette brute due au déficit actuariel, (Québec vs VG, 2011-2012).

Déficit actuariel selon le rendement

Car notre gouvernement n’a pas assez de courage de dire dans quel marasme financier que le Québec se retrouve si le rendement projeté est irréalisable, avec la conjoncture économique actuelle, soyez assurés ça ressemble plus à des rendements fantaisistes.

Donc, nous sommes en droit, en tant que peuple de savoir dans quel bateau qu’on s’est fait embarqué et quelles sont les décisions qu’on doit prendre, ce n’est pas en gardant les gens dans l’ignorance que le problème va disparaître de lui-même.

The 2012 budget, however, proposes a consultation process that should help curb taxpayer exposure to these risks.

In case of a funding deficit:

·         Future pension benefits would first be reduced — to a reasonable limit — before government contribution hikes would be considered.

·         In effect, this would cap taxpayers’ contributions to their existing levels, which in their current range of 11% to 13% of employees’ pay, have already risen considerably in recent years, and are yet scheduled to increase even more.

Other taxpayer liability risks do not appear in the 2012 budget’s balance sheet. The Pension Benefit Guarantee Fund, which assists members of failed private pension plans when there are insufficient funds to pay benefits, is a large risk for the province if investment returns remain lower than expected. 

It also remains unclear if the province would take on additional financial responsibilities if Ontario’s municipal pension plans saw growing funding deficits — for instance, OMERS is currently at $7.3-billion. The same is true for Ontario’s Workplace Safety and Insurance Board, which collects premiums for workplace injury benefits, and currently accounts for an unfunded liability of $12.3-billion that is surely higher than estimated.

Évidemment, ils semblent que les omissions comptables ne sont
pas uniques au Québec, oups !, on a oublié.

Should it get the majority support of parliament, the 2012 budget would take some important steps to curb Ontario’s deficit. Taxes would stay at their current levels, providing an environment for growth; revenue assumptions are realistic; and expenditure reductions firm.

More clarity on Ontario’s exposure to potential liability risks — like pensions — would improve the government’s stance in the eyes of credit-rating agencies.

Though the scale of risks for Ontario is nowhere near those in Greece, creditors are increasingly on the watch for government liabilities often larger than reported.

In the end, you can’t manage what you don’t measure.

Surtout, pour ne pas effrayer la population sur des promesses insolvables.

Colin Busby is a senior policy analyst and Alexandre Laurin is the associate director of research at the C.D. Howe Institut.


Frank BC

This PS Pension Plan travesty is going to be a very big issue not just in Ontario.The Lies and witholding of Information alone should be enough to question Mcguinty and his Government's actions.

If they make an Agreement or Contract with their Employees for their Pensions and they merrily collect the ridiculous Pensions that their own system can not afford, and they knew about it all the time ,but signed it anyway,it's illegitimate.

The Government that signed it was dishonest to it's Voters thus their Contracts are not enforcible.The Public may have voted them in but the CS also voted for them ,in fact co-erced others to vote for them,based on Lies by these Politicians.

For them to promise all these goodies to the CS to win and then eventually they fade off into their own Super-Pensions based on those lies that were unaffordable will probably divide the Country.It will certainly divide people.

Mcguinty is the worst of them.