Ontario’s Progressive Conservatives said Monday that taxpayers can no longer afford “gold-plated pension plans” for public sector workers, but the Liberal government called the Opposition’s proposals an American-style attack on the middle class.
“We have to address the dramatic unfairness in the system where you have gold-plated pensions for some and no pensions for others,” said Opposition Leader Tim Hudak.
Ontario faces a $100-billion funding liability for about 90 public sector pension plans that will only get worse if the rules aren’t changed, added Hudak.
“We have people who are barely scraping by, have nowhere near the pensions that government workers do, and they’re being asked over and over again to pay more taxes — or see fewer public services — to bail out pensions,” he said.
“The world has changed dramatically in the last number of decades and our pension system has not caught up with it.”
Mr. Hudak wants the province to phase in a higher minimum retirement age for public workers and give new nurses, teachers and other civil servants a defined contribution pension instead of the defined benefit plans that 94 per cent of them currently have.
The Canadian Auto Workers agreed to a two-tier pension system for new hires at the Big Three automakers, and it’s time the government took similar action, he added.
“All new government employees under our plan would only be offered pension plans based on what they put in — defined contribution plans — not what some politician or public sector employer promises when they know that they can’t pay for it,” said Hudak.
Finance Minister Dwight Duncan called Mr. Hudak’s proposals “simple, Mitt Romney, right-wing bromides” taken from the Tea Party wing of the Republicans that he said do not address the real issue of unfunded pension liabilities.
“This is an attack on the middle class, make no mistake about it. It is a clear, unequivocal attack,” Mr. Duncan told reporters.
“It is trying to enhance a perception that somehow it’s wrong for any sector of the public to have good pension plans.”
The New Democrats called the Conservative’s pension reforms “reckless and unworkable,” and said they would push more retirees into poverty and cost the government millions of dollars in court battles.
“Rather than undermine solid pension plans that work well and drive our economy, or throw hundreds of millions of dollars in new fees to insurance companies, let’s look at new positive solutions that strengthen existing plans and provide retirement benefits to people who need them,” said NDP finance critic Michael Prue.
The Conservatives also called for pooled pension plans for the three-quarters of private sector workers who don’t have a retirement plan, but it would not require employers to make any contributions.
“Does it mandate that an employer pay into the plan? No, but it does allow for a plan to be there and it’s portable, because right now it’s not happening with small businesses,” said Mr. Hudak.
“It’s too expensive to have to administer their own pension plan.”
The Liberals questioned the need for pooled plans when there are billions of dollars worth of unused room in retirement savings plans and tax-free savings accounts, and said they instead prefer a “gradual, moderate” increase in the Canada Pension Plan.
“We have not yet defined what we mean by that, but we believe that is important,” said Mr. Duncan.
“We have to realistically address the issue of post-retirement income. We believe very strongly that we ought to be enhancing the Canada Pension Plan.”
The Tories oppose increases in premiums for employers under the CPP.