July 16, 2020 – How big are the obligations of pension plans covering workers in Canada’s broader public sector, and how adequate are the assets in those plans to cover their obligations? Who bears the risks if these plans run into trouble? A new report from the C.D. Howe Institute argues that taxpayers and plan participants need more clarity about the risks in multi-employer plans, notably plans with benefits that are contingent on their funded status. When taxpayers are on the hook for funding shortfalls, argues the author, William B.P. Robson, CEO of the Institute, financial statements of employers and governments should spell that out. When participants face risks that their benefits may be smaller than they expect, they need transparency.
The report focuses on the pension plans that now cover hundreds of thousands of current and former employees of Canadian governments, and millions more who work, or worked, for organizations such as hospitals, school boards, and colleges. In “Gaps, Quirks and Fixes: Accounting for Broader Public-Sector Pension Plans in Canada,” Robson surveys the treatment of these plans in the financial statements of the employers themselves, and the governments that control and/or fund them. He uncovers some gaps and problems, and makes several recommendations to foster more complete and transparent reporting of the costs and risks related to these plans.
