Generous energy pensions funded by hydro bills

By MPP Toby Barrett

After seeing the cost of electricity double in 10 years, it is projected prices will increase by 40 per cent over the next four years. That’s what we knew prior to June.

What we didn’t know, and what every ratepayer should have known, was the situation is bleaker. On the Friday of the August long weekend, Premier Wynne quietly released a report on hydro employee pensions that show hydro consumers are paying more on their bills due to bloated energy agency pensions.

In fact, energy consumers are contributing nearly $5 for every $1 Ontario energy employees are contributing to their own pension. That’s one more reason the average Joe is finding it increasingly difficult to pay the bills, let alone have some money left over to save and invest. Saving for one’s own retirement is tough when you’re working to pay for someone else’s.

Consumers paid $585 million in 2012 into pension plans for employees who had contributed just over $100 million at government agencies like Hydro One, OPG, the Independent Electricity System Operator, and the Electrical Safety Authority. Between the four pension plans there are about 18,000 active members and 19,000 retired and deferred members. According to Bill Tufts of Fair Pensions for All, a retired hydro worker enjoys a pension worth twice the average working wage.

Special Advisor Jim Leech was commissioned by the government following a damning report last December by Ontario’s Auditor General. Leech wrote in his report: “The plans are far from sustainable. With employer contributions already high, none of the plans have the ability to absorb further market fluctuations, lower-than-estimated investment performance or costs associated with pensioners living longer.

“Should plans go further into deficit, the sponsors and, ultimately, ratepayers will be required to pay even larger contributions.”

Over the next five years, Leech is recommending the employer-employee contribution, for all four plans, transition to a 50/50 ratio. He also suggests a joint governance by employers and plan members, with joint responsibility for the sustainability of plans.

In the meantime, the next few years will be painful for energy customers who will indeed see larger hydro bills but won’t receive more money on their paycheque to offset the cost of living increases. The folks I have spoken to about this can’t decide what upsets them more – the fact hydro bills will continue to climb or the fact the report, written last March 18th, was shelved until the Friday of a long weekend in August.

Premier Wynne talks about being open and transparent and yet her actions do the exact opposite. This government has long lacked credibility on the energy file and once again we see a government seriously failed to govern.

The original concept of pensions was to keep our seniors out of poverty. However, today’s public sector pension provides for luxury. The federal government now offers a retirement savings option – the Pooled Registered Pension Plan — that works for those who are self-employed as well. The investment options are similar to those for other registered pension plans, and members can have greater flexibility managing their savings and meeting retirement objectives. Ontario has yet to join other provinces in considering this option, instead pushing its own Ontario Retirement Pension Plan.

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