one might find the cure for sleep- lessness by repeating the words “unfunded pension liability” over and over before bedtime. Unfortunately, unfunded pension liabilities may soon become a decidedly attention-grabbing issue for whichever party wins Newfoundland and Labrador’s next provincial election, expected in 2015.

A report by risk consultants Marsh & McLennan Cos. in 2013 found the province has only $6.30 billion in assets to cover $11.4 billion in liabilities; furthermore, the funded ratio of 54% is by far the lowest of any provincial public-sector pension fund in Canada.

The report also states: “It is unreasonable to expect that the funded position will improve in the future without changes to benefit and/or contribution levels.”

The situation is so dire, the Marsh & McLennan report warns, that “it is simply not plausible to expect that the current fund will ever grow at a rate sufficient to meet accrued obligations.”

The Canadian Federation of Independent Business (CFIB) points out that pension liabilities are likely to surge to $8 billion in 2016 due to longer lifespans and early retirements of public-sector workers. The province has tried to reverse the trend, most notably in 2005-06, when it dropped $3 billion into two of the largest pension funds. Unfortunately, these same plans lost almost the equivalent of these one-time contributions during the 2008 market crash and the subsequent recession.

The CFIB has identified general government spending as a key reason for the problem, noting that public spending by the provincial government has increased by 150% since 2000. According to a CFIB statement released this past spring: “Our government is squandering our oil wealth in the short term, which is irresponsible in the long term.”

The CFIB is calling for changes in the way public-sector pensions are funded, by moving new government employees away from a defined-benefit model to a defined-contribution or “shared risk” model.

To make matters worse, the province also is preoccupied with funding the Muskrat Falls hydroelectric power project. In 2014, total public-sector debt – which excludes unfunded pension liability – is expected to balloon by $4.9 billion to $11.57 billion, entirely as a result of borrowing for Muskrat Falls.

So far, Nalcor, the crown corporation in charge of that project, has not disclosed any willing buyer for the power to be generated apart from Nova Scotia’s Emera Inc., which is building a 170-kilometre subsea link from Newfoundland to Cape Breton.

So far, Newfoundland and Labrador’s successive Progressive Conservative governments have resisted changes of the sort favoured by the CFIB. But this could soon change, as incoming Premier Frank Coleman (who becomes premier mid-term) takes his place at the helm this month. While Coleman has made no promises regarding public-sector pensions, neither have the Liberals, who hold a commanding lead in public-opinion polls.

But neither party can ignore the combined effect of financing both Muskrat Falls and unfunded pension liabilities in the years ahead.

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