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Supersized Superannuation: The Startling Fair-Value Cost of Federal Government Pensions

Author

Listed:
  • Alexandre Laurin

    (C.D. Howe Institute)

  • William B.P. Robson

    (C.D. Howe Institute)

Abstract

Governments are major employers, and usually provide defined-benefit (DB) pension plans with full inflation indexing and generous early retirement provisions. Hence, changes in thinking about, and accounting for, the costs of DB pension plans have major implications for government finances. Both past tallies on government balance sheets and current accruals on government income statements may understate the true cost of public-sector employment in Canada, and gradual recognition of changes in the financial status of government plans may understate the risks they create. Fair-value approaches are exposing higher costs, risks and funding deficits in DB plans, raising concerns about the security of their promises for participants and the exposure they create for taxpayers.

Suggested Citation

  • Alexandre Laurin & William B.P. Robson, 2009. "Supersized Superannuation: The Startling Fair-Value Cost of Federal Government Pensions," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 122, December.
    • Handle: RePEc:cdh:backgr:122
    as

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    File URL: https://www.cdhowe.org/public-policy-research/supersized-superannuation-startling-fair-value-cost-federal-government-pensions
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    References listed on IDEAS

    as
    1. Colin Busby & William B.P. Robson, 2009. "Near Hits and Big Misses: Canada's 2009 Fiscal Accountability Rankings," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 117, April.
    2. Robert Novy-Marx & Joshua D. Rauh, 2008. "The Intergenerational Transfer of Public Pension Promises," NBER Working Papers 14343, National Bureau of Economic Research, Inc.
    3. David Laidler & William B.P. Robson, 2007. "Ill-Defined Benefits: The Uncertain Present and Brighter Future of Employee Pensions in Canada," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 250, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. William B.P. Robson & Colin Busby, 2010. "Freeing up Food: The Ongoing Cost, and Potential Reform, of Supply Management," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 128, April.
    2. Alexandre Laurin & William Robson, 2010. "The Public-Sector Pension Bubble: Time to Confront the Unmeasured Cost of Ottawa's Pensions," e-briefs 108, C.D. Howe Institute.
    3. Alexandre Laurin & William B.P. Robson & Colin Busby & Finn Poschmann, 2010. "Back to Balance: A Shadow Federal Budget for 2010," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 127, February.
    4. William B.P. Robson, 2010. "Cutting Through Pension Complexity: Easy Steps Forward for the 2010 Federal Budget," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 126, February.
    5. Lawson A.W. Hunter, Q.C. & Edward Iacobucci & Michael J. Trebilcock, 2010. "Scrambled Signals: Canadian Content Policies in a World of Technological Abundance," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 301, January.
    6. Henning Bjornlund, 2010. "The Competition for Water: Striking a Balance among Social, Environmental, and Economic Needs," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 302, April.
    7. Martin Cave & Adrian Foster, 2010. "Solving Spectrum Gridlock: Reforms to Liberalize Radio Spectrum Management in Canada in the Face of Growing Scarcity," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 303, May.
    8. William B.P. Robson, 2011. "Don’t Double Down on the CPP: Expansion Advocates Understate the Plan’s Risks," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 137, June.
    9. Donald N. Dewees, 2010. "The Price Isn't Right: The Need for Reform in Consumer Electricity Pricing," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 124, January.
    10. Colin Busby, 2010. "Supporting Employees who Deploy: The Case for Financial Assistance to Employers of Military Reservists," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 123, January.
    11. William B.P. Robson & Alexandre Laurin, 2015. "Ottawa's Secret Debt: The Burden and Risks of Federal Employee Pensions," e-briefs 208, C.D. Howe Institute.
    12. William Robson, 2012. "Ottawa's Pension Abyss: The Rapid Hidden Growth of Federal-Employee Retirement Liabilities," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 370, December.
    13. Alexandre Laurin & William B.P. Robson, 2011. "Ottawa's Pension Gap: The Growing and Under-reported Cost of Federal Employee Pensions," e-briefs 127, C.D. Howe Institute.
    14. William B.P. Robson & Alexandre Laurin, 2012. "Federal Employee Pension Reforms: First Steps - on a Much Longer Journey," e-briefs 140, C.D. Howe Institute.

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    More about this item

    Keywords

    Pension Papers; governance and public institutions; fair-value accounting; defined-benefit pension plan;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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