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

16 Pages Posted: 20 Feb 2010  

Alexandre Laurin

C.D. Howe Institute

William B. P. Robson

C.D. Howe Institute

Date Written: December 17, 2009

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.

Keywords: Pension Papers, governance and public institutions, fair-value accounting, defined-benefit pension plan

JEL Classification: H55, H11

Suggested Citation

Laurin, Alexandre and Robson, William B. P., Supersized Superannuation: The Startling Fair-Value Cost of Federal Government Pensions (December 17, 2009). C.D. Howe Institute . Available at SSRN: https://ssrn.com/abstract=1553930 or http://dx.doi.org/10.2139/ssrn.1553930

Alexandre Laurin (Contact Author)

C.D. Howe Institute ( email )

67 Yonge St., Suite 300
Toronto, Ontario M5E 1J8
Canada

HOME PAGE: http://www.cdhowe.org

William Robson

C.D. Howe Institute ( email )

67 Yonge Street
Suite 300
Toronto, Ontario M5E 1J8
Canada
416-865-1904 (Phone)
416-865-1866 (Fax)

HOME PAGE: http://www.cdhowe.org

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