Canada has a two-tier retirement system, which favours public sector employees over workers in the private sector, according to a report released by the Canadian Federation of Independent Business Pension Research Series (CFIB).
According to the report, 80% of Canadians are employed in the private sector and two-thirds of those people do not have a workplace registered pension plan. The remaining 20% of the workforce are in the public sector. Of those people working in government, 87% have a workplace registered pension plan, which typically guarantees the benefits.
Furthermore, while a federal government employee has only to contribute 7% of his or her salary to replace 70% of their working income in retirement, says the CFIB, a private sector worker has to contribute 21% of his or her salary to have the same result.
“Governments are doing a huge disservice to the majority of taxpayers by permitting these disparities to grow,” said Plamen Petkov, CFIB’s Ontario director and report author. “It’s time they took action to address the unfair gap between public and private sector retirement benefits.”
Specific recommendations the report makes for addressing those issues include eliminating early retirement, more sustainable pensions for politicians/civil servants, rejecting CPP/QPP increases and new retirement savings options for Canadians, such as pooled registered pension plans (PRPPs).
CFIB adds that it does not mean for governments to take away pension benefits currently being earned by retired public sector workers.