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Signs advertise RRSPs and other investments in downtown Toronto.Peter Power/The Globe and Mail

Just weeks after the federal government announced plans to reduce its pension burden, the Drummond report poked the same hot button issue by recommending an end to lucrative provincial government pension benefits.

For the most part, economist Don Drummond did not go into much detail about possible reforms to save money. He notes generally that when closing the gap between how much goes into public sector pensions and how much retirees get, the objective should be to "reduce prospective benefits rather than increase the contribution rate beyond current levels."

However, he does recommend ending "gratuity benefits," or lump-sum bonuses, paid to teachers upon retirement. Many school boards have already done away with them.

That Mr. Drummond touched the pension file demonstrates more concern over meeting payment obligations as Canada's population ages and stock and bond returns remain weak. Earlier this year, the federal government proposed increasing the age of eligibility for Old Age Security to 67 from 65, noting that OAS costs are expected to triple by 2030.

The report calls on the McGuinty Liberals to act boldly if unions won't compromise: "The government may need to consider legislative options should negotiations with plan sponsors be unsuccessful."

The Ontario Teachers' Federation said it has taken steps to fix funding shortfalls by increasing the amount teachers pay in – precisely what Mr. Drummond rejected. Yet federation president Francine LeBlanc-Lebel suggested her group is open to discussions on issues such as teachers' eligibility for full pensions at age 55 if they have worked for 30 years. "This might be something that will be addressed in the next few years," she said.

Linda Haslam-Stroud, president of the Ontario Nurses' Association, said the Healthcare of Ontario Pension Plan has "reasonable benefits."

"Our nurses are exhausted from the heavy workloads, the heavy lifting, and there are looking forward to a retirement that they have paid into dearly," she said.

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