Canada exacts C$6.7 billion from public retirees for health costs

Wed Mar 26, 2014 2:30pm EDT
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By Randall Palmer

OTTAWA (Reuters) - Retired federal workers will pay more of their supplemental health costs under an agreement with the Canadian government intended to align the public sector with the private sector, Treasury Board President Tony Clement said on Wednesday.

Retirees' contributions will rise to 50 percent of the cost of their health plan from 25 percent now. The supplement plan pays for drugs, eye-glasses and other items not covered by the general medical care plan that is free for all Canadians. Low-income pensioners will not be affected.

The government will also require six years of employment, instead of two, to be eligible.

The new deal is projected to save C$6.7 billion ($6.0 billion) over six years, less than the C$7.4 billion flagged in the Conservative government's February 11 budget, but it avoids the threat of a court challenge if Ottawa had tried to impose the changes through legislation.

"Now we have zero legal risk," Clement told Reuters.

"I'm quite convinced that this in total puts our books in a better fiscal light... Those savings are now certain. There was a low-to-medium legal risk before."

The broad lines of the changes had been announced in the federal budget, but agreement had not been reached with the unions and retirees. The package was sweetened with some modest improvements to current benefits, including eliminating a C$60 annual deductible for single individuals and C$100 for families.

The February budget charted a return to a balanced federal budget in 2015, partly through savings exacted from public sector unions.   Continued...

Canada's President of the Treasury Board Tony Clement speaks during Question Period in the House of Commons on Parliament Hill in Ottawa February 6, 2014. REUTERS/Chris Wattie