Ontario says to save up to C$1.5 billion under pension agreements

Tue Oct 23, 2012 1:05pm EDT
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By Claire Sibonney

TORONTO (Reuters) - Ontario's minority Liberal government said on Tuesday it struck a deal with three major public-sector pension plans to freeze contribution rates, a move that could help eliminate its C$14.4 billion ($14.51 billion) deficit in five years.

The announcement may help ease concerns among investors and debt-rating agencies that Premier Dalton McGuinty's surprise resignation and his decision to halt the legislative session would stall the province's drive to tackle its budget shortfall.

Also on Tuesday, McGuinty scotched speculation that he was considering a bid to lead the federal Liberal Party. He told the Canadian Press he would not challenge Justin Trudeau, the charismatic son of former Canadian Prime Minister Pierre Trudeau and the frontrunner to become the new leader of the country's oldest political party.

The agreements, signed with the Ontario Public Service Employees Union Pension Plan, Healthcare of Ontario Pension Plan and Colleges of Applied Arts and Technology Pension Plan, will freeze contribution rates for five years, except in exceptional circumstances.

Finance Minister Dwight Duncan said the pension changes should save up to C$1.5 billion over the next few years.

Ontario Teachers Pension Plan, the largest single-profession pension administrator in Canada, was notably missing from the deal. The province's teachers are taking the Ontario government to court over legislation that aims to freeze wages and benefits and take away their right to strike.

Duncan told reporters that the teachers, included in the estimated C$1.5 billion in savings, would be subject to pension freezes through legislation.

In its autumn economic statement last week, the government of Ontario, Canada's most populous province, reduced its deficit target slightly to C$14.4 billion from C$14.8 billion ($14.91 billion) in April. It kept its 2013-14 and 2014-15 deficit forecasts at C$12.8 billion and C$10.1 billion, respectively.   Continued...