The Public-Sector Pension Bubble: Time to Confront the Unmeasured Cost of Ottawa's Pensions
Fair-value accounting reveals Ottawa’s employee pension obligations to be larger and more volatile than official figures, a problem shared by European and US state governments. This exposes taxpayers to an unmeasured $65 billion funding shortfall. To keep pace with benefit accruals and stop the gap from growing, contributions in the latest fiscal year would have had to be almost double what was actually paid in. Taxpayers risk finding that the responsibility to back-fill the funding hole falls to them – and potentially finding that fears of sovereign defaults by governments with opaque balance sheets and big exposure to public employee pensions will drive up the cost of borrowing.
|Date of creation:||Nov 2010|
|Publication status:||Published on the C.D. Howe Institute website, November 2010|
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