Ottawa pensions rising 6 times faster than inflation / OMERS early retirements rising 13% per year


The number of OMERS early retirements rose 54% in 4 years to 4,716 in 2011, would taxpayers accept a 13% yearly increase in property taxes to fund early retirements?


Since Toronto is asking that the funding threshold be reduced to 80%, OTAG calls on the City Council to reduce liabilities by 20%, by adopting best practices for new and recent hires on:


  • minimum mandatory retirement age
  • indexing to CPI
  • career-average earnings
  • quantified disclosure of non-salary impact of union agreements
  • reducing employer employee contribution ratio
  • reducing benefits per Drummond Report
  • defined contribution plan for new hires


Analysis of Ottawa’s rising compensation costs from 2008 to 2012 show a 50% rise in pension contributions to about $90 million, this was much faster than the rise in salaries at 16%, statutory at 18% (CPP, EI, HT) and health insurance at 24%.


Pensions are rising at about 3 times the rate of salaries and almost 6 times the rate of inflation. This means less for funds for water, roads and other infrastructure needs. It is therefore hard to understand why there seems to be no interest to even discuss best practice.


Why is Ottawa allowed to use the Vested Employee Sick Leave reserve funds to fund 2012 and 2013 pension deficits? The concern is that Ottawa is signing unaffordable union contracts, because the bills are due in the future.


Why is the Ontario health tax an employer obligation as opposed to an employee obligation as is the case in the private sector?


To be fair to the private sector, new hires should have this fee deducted from their salary.


Why do OC Transpo employees get a better deal than some other employees? When they joined OMERS in 1999 the City became responsible for 100% funding of pension shortfalls. Since OC Transpo is federally regulated, who has the authority to make the funding of shortfalls a 50:50 contribution?


Debt should only be considered for infrastructure costs, why is Ottawa allowed to cover unfunded liabilities with letters of credit?


Ottawa’s COSF pension plan requires annual indexing of benefits equal to 55% of CPI, but Council voted to top this up to 100% of CPI. Over 20 years, this decision has a price tag of $26 million dollars; COSF members refused to join OMERS and were rewarded, should Council reverse this decision? A COSF OMERS merger would eliminate its future payment obligation.


Kevin MacDonald, President
Ottawa Taxpayers Advocacy Group (OTAG)