Ont. suggests review of '85-rule' for teacher retirements
Early retirement provisions for Ontario teachers became a political hot potato Wednesday after the province's education minister suggested stakeholders needed to review the so-called 85-rule in light of a $12.7-billion shortfall in the teachers' pension plan.
"There are a lot of healthy, retired teachers, and it's the baby boom issue, you know, there are pension plans all over the world dealing with these concerns," Kathleen Wynne told reporters before a Liberal cabinet meeting.
"It's one of the things that the partners at the table have to talk about."
When asked directly if the rule — which allows Ontario teachers to retire when their age and years of service add up to 85 — was sustainable, Wynne replied: "I think that that's the kind of conversation that will happen within the fund, with the partners at the table."
Later Wednesday, Wynne scrambled to clarify her remarks, insisting she never advocated scrapping the 85-rule.
"What I'm saying is — and if there was any misunderstanding I apologize — there will be a number of things on the table, I presume, but I'm not putting forward a particular position and our government is not promoting a particular position," Wynne said after question period.
"I just want to be clear: our government has no intention of putting forward a position that the 85-factor should be pulled."
NDP Leader Howard Hampton said there's really only two options on the table to address the $12.7-billion shortfall in the teachers' pension plan.
"The government can increase the contribution amount or they can simply say the teachers will have to wait longer before they retire," said Hampton. "It's not as if the government doesn't have any options, but they can't pretend that there's no problem."
Progressive Conservative Leader John Tory said any publicly funded pension plan has a duty to look at all possible solutions when it runs into financial difficulties.
"They have an obligation to look at whether the way in which we calculate benefits, the way in which people qualify for benefits — including the 85-point rule — are sustainable," said Tory.
"They should … present a series of options to the government that is complete in terms of saying here are ways in which we can address the shortfall, short of just saying why doesn't the government just pony up more money."
The Ontario Teachers' Federation declined comment Wednesday after receiving a call from Wynne's office.
The shortfall between assets and liabilities in the $108-billion Ontario Teachers' Pension Plan will have to be resolved with higher contributions from employers and workers, reduced benefits for retirees, a revision of the plan's underlying assumptions or a combination of all those options.
Wynne said that the province — the employer — has already increased its contributions for teachers' pensions from $800 million to $1.1 billion, but she wouldn't say if there was more cash available for the government to kick in to address the shortfall.
"We'll continue to work with our partners," she said when asked about increasing the province's financial contribution.
The plan reported Tuesday that its assets at Dec. 31 were $108.5 billion, up $4.7 billion on the year, but representing a $12.7-billion shortfall between its assets and liabilities, the payments it is obliged to make to retirees in future.
Its public and private equity holdings totalled $50 billion at year-end after a negative 0.1 per cent investment return during 2007. Fixed-income assets amounted to $18.7 billion after a 5.4 per cent return.
A balanced valuation plan must be filed with the provincial regulator by September, and plan officials said this week that work is well underway.