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August 09, 2021

Attack on pension plans coming to Canada?

There’s a class war coming to the world of government pensions, predicts Ron Lieber in the New York Times. At issue is whether commitments made to retired public servants by government pension funds can be scaled back in dire economic times.

Of course, it’s already happening in some jurisdictions.

Earlier this year, Colorado legislators passed a pension overhaul bill which, among other things, trimmed the inflation-related boost that workers who are already retired get in their pension cheques each year.

The bill reduced the pension system's cost-of-living adjustment from a fixed 3.5% a year to a maximum of 2% — but possibly less for current and future retirees — increasing contributions from employees and employers at the same time.

In response, Colorado has been hit by lawsuits filed by retirees, who claim the changes violate state law. To them it’s a simple question of deferred compensation, and taking pensions away is akin to not paying a contractor for paving state highways, they maintain.

If judges decide in favor of the retirees, however, public pension funds will have to find another potentially painful way to bridge the funding gap – and that’s got to come out of the taxpayer's pocket.

Here’s what some disgruntled folks across the border have to say. Could something similar happen here? Well, the Public Service Alliance of Canada certainly thinks so. And the Ontario Teachers' Pension Plan started cutting back on inflation protection for some future retirees last year.

What’s your take? Given that some governments have promised more in retirement benefits to their employees than they’ve put aside, who should pay to make up the difference?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...