The Canadian Taxpayers Federation (CTF) and pension expert Bill Tufts (Author of Pension Ponzi and founder of Fair Pensions for All) blew the whistle today on the City of Saskatoon’s skyrocketing employee pension plan shortfalls.

Deloitte and Touche audit reports show the combined deficits of the city’s three defined benefit pension plans for city employees nearly doubled over the last year; increasing from $61 million at the end of 2010 to $113 million at the end of 2011.

Pension Plan Deficits

Source: Deloitte and Touche pension plan financial statements (see links in table)

“Plain and simple voters need to ask candidates if they would put new hires at the city of Saskatoon in a less expensive pension plan or if they’ll continue with this one,“ said CTF Prairie Director Colin Craig. “If people vote for the latter, then they run the risk of big shocks to their property tax bills.”

Craig noted that city officials have indicated matched taxpayer contributions towards the employee plans have increased substantially over the past five years. For example, the police plan has seen an increase in employee and matched taxpayer contributions from 7% of the employee’s to 9%. Despite the rate increases, the contributions are still far less than what is required.

At the city of Regina a recent pension report showed a $293 million shortfall. In Ontario, the pension plan for cities has seen its shortfall rise from $278 million in 2008 to over an estimated $10 billion by the end of this year. Montreal and St. John have been gripped by pension problems as well.

The private sector has wound down these defined benefit plans as they are extremely costly and risky.  Conversion of these current plans into defined contribution pensions is urgently needed. The CTF has been asking election candidates to sign a “Voter’s Contract,” which includes a commitment to move towards less expensive defined contribution pension plans.

“There appears to be a pension crisis at city hall in Saskatoon and yet no one is talking about it,” said Bill Tufts, author of Pension Ponzi. “The city should follow the provincial government’s lead and move towards defined contribution plans for new hires. They’re less expensive and not as risky for taxpayers.”