OTTAWA, ON: With Labour Day just around the corner, the Canadian Taxpayers Federation (CTF) released new numbers today on “stealth bailouts” for government employee pension plans.

Virtually every government employee pension plan in Canada hit troubled waters over the past decade, but rather than reform the plans or bail out these plans with large cheque presentations, governments have been quietly increasing taxpayer contributions, creating a “stealth bailout.”

According to Statistics Canada data, governments in Canada put $6.7 billion into government employee pension plans back in 2002. By 2012, that expense had skyrocketed to $18.1 billion; a 169% increase. The CTF calculated the cost per employee at $2,676 in 2002 and $5,741 by 2012; an increase of 115%. These calculations do not include special back payments made by governments.

“It’s not fair for everyday Canadians to have to keep bailing out government employee pension plans,” said CTF Federal Director Gregory Thomas. “Politicians should have reformed these expensive and unstable government employee pension plans years ago. It’s time to act.”

Pension Contributions by Governments in Canada

Sources: Cansim Tables 280-0026 and 280-0008. Government contributions do not include back payments, only annual contributions that are based on rising rates.

In Nova Scotia, taxpayers have paid for similar pension bailouts. In 2002-03, taxpayers put in $36.9 million into the provincial government’s employee pension plan. In 2012-13 that figure jumped to $84.2 million; a 128% increase in 10 years. These numbers do not include the $536 million bailout of the public service pension plan in 2010.

Other Nova Scotia pension plans are in big trouble. The Nova Scotia Teachers pension plan has an unfunded liability of $1.5 billion.

Canadian Taxpayers Federation noted that 75 per cent of Nova Scotians who work outside government have no pension at all.

“It’s unfair that taxpayers working outside government who have no pension at all are seeing more of their tax dollars going to fund the very rich pensions of government workers,” said CTF Atlantic Director Kevin Lacey. “It’s time for politicians to take action with government employee plans.”

The CTF has called on politicians to do three things:

1) Lead by example: Convert their own costly defined-benefit pensions into less costly defined-contribution plans

2) Stop the bleeding: Just as Saskatchewan's NDP government did in the late 1970s, begin putting new employees into less risky defined-contribution plans; this type of plan protects taxpayers from bailouts.

3) Make dolike everyone else: follow New Brunswick’s lead for “targeted-benefit” clauses for existing plans. This requires the plans to pay out what they can afford rather than the sky is the limit approach.

The CTF has released two YouTube clips to explain these bailouts to the public – click here and here to view them.