In the newly released IMFG Paper, Municipal Employee Pension Plans in Canada: An Overview, pension expert Bob Baldwin provides the first-ever general review of Canada’s local public pension plans.
With the growing number of public employees nearing retirement, and some cities experiencing financial troubles with their pension plans, a study of this kind is long overdue. Seeking to fill an apparent knowledge gap, the paper takes an important first step in answering some key questions about municipal pension plans: Are the difficulties experienced in select cities across the country typical? Are certain kinds of plans better protected from financial shocks than others? Are bigger plans less vulnerable? More generally, have municipal pensions become too generous and expensive for municipalities to support?
In his findings, Baldwin suggests that while the overall state of local pensions is satisfactory, there are indeed significant risks for municipal finance going forward. In particular, pensioner populations are growing quickly relative to populations of active plan members, and difficult conditions in financial markets seem unlikely to change significantly in the near future.
Baldwin suggests that the absence of accessible plan-level data not only makes it difficult to draw definitive conclusions, but harms the public interest. He calls for coordinated action among city administrators and public pension stakeholders to make information about their pension plans publicly accessible. Similar databases are available in the US; making them available in Canada would allow for better and deeper analysis of pension plans and their implications for municipal finances.
About the Author
Bob Baldwin has worked on pension management and policy for more than 30 years. He is a director of Addenda Capital, chairs the board of trustees of the Canada Wide Industrial Pension Plan, and is a member of the Actuarial Standards Oversight Council and the Pension Policy Council of the C.D. Howe Institute. He was a member of the expert panel that advised the Ontario Expert Commission on Pensions. He is also formerly the Director of Social and Economic Policy at the Canadian Labour Congress.
The IMFG Papers on Municipal Finance and Governance are designed to disseminate academic research undertaken in Canada and abroad on municipal finance and governance issues. The series includes papers by Canadian and international scholars.