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Ontario PC Leader Tim Hudak, right, and Christine Elliott speak to reporters at Queen's Park in Toronto on Thursday, Feb. 7, 2013.

FRANK GUNN/THE CANADIAN PRESS

Ontario's Progressive Conservatives are calling on the government to raise the retirement age of public-sector workers and claw back their pension benefits to avert future shortfalls.

The province's Liberal administration has negotiated deals over the last year to shift more responsibility for pension payments away from the treasury, but the Tory proposals would go a step further.

Under the PC plan, public pensions would follow the lead of their less-generous private-sector counterparts and move to defined contributions, in which benefits received by pensioners are tied to the plan's financial health.

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Tory Leader Tim Hudak also took aim at rules that allow some workers, such as teachers, to retire at age 55.

"It's not fair, it's not reasonable and it's simply not affordable any more," he said.

Mr. Hudak said the government should attempt to negotiate pension changes with public-sector unions but, if that fails, it should be willing to impose reforms through legislation. A new system could be phased in, he said, giving newer workers slimmer benefits than older ones.

He argued that the cost of not reforming the system would be cuts to program spending to pay for unfunded pension liabilities.

"You have a choice: You can take this on or you can take this out of hospitals, you can take it out of classrooms. We choose to protect public services," he said.

In his report last year, economist Don Drummond recommended that, in case of shortfalls, the government should cut benefits rather than increase contributions to pensions. The Liberals have done just that with several pension plans, including the teachers' last week.

All told, Finance Minister Charles Sousa said, the treasury will save $1.5-billion over three years.

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"What we're trying to do is bend that cost curve," he said. "We're trying to lessen the degree of increases going forward and maximizing value for money for the taxpayers and, certainly, for the pensioners themselves who are also contributing."

The third-party New Democrats, meanwhile, favour creating a government-run pension plan for private-sector employees who currently have no pension.

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