Taxpayers cover only about 7.5% of the pension payments

This article has been corrected since its original posting on June 24th, 2013, to reflect that 7.5% (rather than 15%) of the pension payments under the CAAT Pension Plan are covered by taxpayers. We apologize for that error.

Taxpayers cover only about 7.5% of the pension payments under the CAAT Pension Plan, according to Derek Dobson, CEO of the plan.

“Seventy percent of pension payments come from return on investments,” he said, with the other 30% is evenly split between employees and employers. Since employers only receive about 50% of their funding from public sources, the result is that taxpayers fund only 7.5% of the total, despite the common perception that taxpayers cover the whole amount.

Derek was speaking at the OCASA PD Conference in Kingbridge Conference Centre, King City, Ontario, north of Toronto.

Derek also said that defined contribution pension plans are not as efficient either for employees or employers. He said that the pressure toward defined contribution plans comes because two-thirds of the work force has no pension plan. “Defined benefit plans are more efficient,” he said.

Challenging another common clichÈ, Derek said that contrary to common opinion “the new 80 is not 50; The new 80 is 80.” He said that health records show that although retirees are living longer, health is the key issue in senior years.