Thank you, Mr. Chairman, good morning. Good morning, members of the committee, federal panellists, ladies and gentlemen.
I'm Tom Charette with Fair Pensions for All.
We support the clause 229 amendment to the act. The federal government needs to exert more control over the compensation levels and pension plans of crown corporations. The testimony to that are the bailout dollars that had to flow to those corporations in recent years.
We also support the intention of the government to ensure that crown corporation pension plans are broadly aligned with those available to federal employees. We strongly believe that government must go one step further. It must align the pension plans for both crown corporations and federal employees with plans in the broad private sector for two reasons: fairness and financial sustainability.
Let's deal with fairness first here, and these are Statistic Canada numbers. In 2011 there were nearly 17.5 million employed workers in Canada, about 20% or 3.5 million in the public sector and nearly 80%, 14 million, in the private sector. Almost all of these public sector workers have a guaranteed inflation-protected income from the first day of their employment, through retirement, and beyond the grave. Think about that.
We're not saying they have guaranteed employment, although that is virtually the case. They have guaranteed lifetime income. With a spousal benefit attached to their pensions, this income often continues beyond the grave. These pensions are in the order of $30,000, $60,000, $100,000-a-year and up. All the while, 10.5 million of Canadian workers in the private sector have no employer-sponsored pension plan at all, yet they have to contribute to the cost of these “no worries for the rest of your life” inflation-protected public sector pensions every time they pay sales taxes, income taxes, property taxes, buy a litre of gas, renew their driver's licence, etc. Is that fair?
It cannot possibly be fair for the federal government or any other government in Canada to use its power of taxation and spending to benefit what has become an economically elite group in our society. This differential treatment must be addressed. The biggest source of income inequality among Canadian seniors is determined simply by whether or not that person has worked in the public sector. The term pension apartheid really does describe the existing situation.
For sustainability, the real cost of these public sector pensions are only just now beginning to be realized. We must remember that these plans started modestly 40 years ago and reached their current form only about 10 years ago. We have really only just started to pay off on government promises to retiring public sector employees. Now, with many plans already in trouble, there are five things contributing to the perfect storm that is surrounding these plans.
One, a tsunami of baby boomers are beginning to retire. Two, public sector workers continue to retire earlier and earlier with enhanced benefits. Three, life expectancies continue to increase. Four, we've had an extended period of very low rates of return on pension plan assets. Five, the federal and provincial government finances are in shambles across the country. The municipalities are stressed and all levels of government are now ill-equipped to bailout public sector funds.
Your predecessors in government have left you saddled with a huge fairness and sustainability problem. You and your contemporaries in the provincial capitals and municipalities have three choices. One, raise taxes and continue to bailout the plans, and let the unfairness continue. Two, cut government staff and services brutally, keep bailing out the plans, and let the unfairness continue; or three, fix the root problem of the over-generous public sector pensions.
We strongly urge you to choose the latter course of action.
Thank you.