Here’s an email from our blog letter bag that I found very interesting:

With the economy shrinking and the work force getting smaller because of the Baby Boomers retiring how are different layers of government going to pay for these pensions? Right now, the government has its financial hands tied because of lost revenue, as world economies are in the tank. I realize B.C. is not as bad as the American economy and the disaster in Europe, but we are going to get hit just the same since this is global meltdown not seen since the Second World War.

Nobody in the government wants to face up to fact there isn't going to be enough funds to pay for these pension plans, especially the ones that the last premier gave to himself, his caucus and the NDP . Am I right or wrong in thinking?

Robert Slomen
Delta

Robert, you are bang-on in your diagnosis. Yesterday, just hours after I received your email, the CD Howe Institute released a report showing the federal government’s unfunded liability for public sector pensions is now $227 billion--$80 billion more than Ottawa has previously reported.

From the report summary:

1. As private-sector pension providers and individual savers know, low rates of return require them to save more to fund desired incomes in retirement – a fact reflected in solvency valuations of private-sector pension plans, which must use market yields to value their promises.

2. Public-sector pension plans, however, typically do not use market yields to calculate their liabilities: if they did, Ottawa’s unfunded pension liability would stand at $227 billion – some $80 billion larger than reported in the Public Accounts.

3. The value of the typical federal employee’s pension entitlement grows at more than 40 percent of pay annually – much faster than the contributions to fund it – putting taxpayers, most of whom face federal tax rules preventing them from funding as rich a retirement for themselves, at risk of having to bail out Ottawa’s pension plans.

So the bad news for those of us in the private sector: not only are we not saving enough for our own retirements, we are being gouged by our elected officials and bureaucrats to pay more for theirs!