Article content

OTTAWA – Auditor General Michael Ferguson warns public service pension plans are facing a $152-billion liability that could increase with the risk of prolonged low interest rates and employees living longer in retirement.

Ferguson said the government should re-examine the design of the three defined benefit plans for Canada’s public servants, military and RCMP to ensure it can manage risks that could affect the long-term affordability and “sustainability” of the plans.

We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or Canada's $152B public pensions aren't prepared for work force changes, AG warns Back to video

The plans guarantee employees fixed pension incomes upon retirement, meaning any shortfall will leave taxpayers on the hook.

In his Spring 2014 report Tuesday, Ferguson said the government, as the plans’ sponsor, must ensure the plans are “appropriately designed” and that “proper policy options are in place to protect current and future employees, beneficiaries and taxpayers as well as the employer.”

The biggest risks are prolonged low interest rates, lower than expected returns on assets and the increased longevity of public servants, which “could have a significant impact on pension liabilities and the financial position of government,” said the report.