The federal government is making an accounting adjustment that will affect the pensions of millions federal civil servants, members of the Canadian Forces, and of the Royal Canadian Mounted Police. This represents at least 20% of the entire work force of the country
The pensions are funded in part from employee salary deductions and in part from taxes, and in part by interest on investment of the billions of dollars in the fund.
The latter is where the problem lies. The government had been calculating interest on an outdated model which predicted higher interest rates and investment returns meaning the fund itself could be at theoretical risk of running out of money at some point.
Another issue affecting pensions, and one that is worldwide affecting other governments, is the fact that people are living longer and so drawing their pensions for many years longer.
Alison Coffin is an economist and lecturer at Memorial University in Newfoundland
Alison Coffin is an economics lecturer at Memorial University,, Newfoundland (supplied)
