The Public-Sector Pension Bubble: Time to Confront the Unmeasured Cost of Ottawa's Pensions

Alexandre Laurin and William Robson
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Alexandre Laurin: C.D. Howe Institute

No 108, e-briefs from C.D. Howe Institute

Abstract: 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.

Keywords: Pension Papers; fair-value accounting; Canadian public-sector pensions; defined-benefit (DB) plans (search for similar items in EconPapers)
JEL-codes: H55 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2010-11
New Economics Papers: this item is included in nep-acc and nep-age
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published on the C.D. Howe Institute website, November 2010

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Persistent link: https://EconPapers.repec.org/RePEc:cdh:ebrief:108

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