The discrepancies in retirement benefits between public-sector workers and their private-sector counterparts has led to a two-tiered retirement system in Canada, according to a Canadian Federation of Independent Business report released September 12.
Canada's Two-tier Retirement outlines the sharp contrast between the two, and details how the system strongly favours public-sector employees.
"Governments are doing a huge disservice to the majority of taxpayers by permitting these disparities to grow," said Plamen Petkov, CFIB's Ontario director and report author.
"It's time they took action to address the unfair gap between public- and private-sector retirement benefits."
The report provides an illustration of two workers over a 35-year career, each performing the same job and receiving the same annual salary, one of whom is a public-sector worker, the other private.
Due to factors such as generous employer contributions and a defined-benefit pension plan, the public-sector worker in the illustration will have a total benefit that is twice that of the private-sector worker doing the same job for the same salary.
CFIB president Dan Kelly pointed out that this comparison doesn't even take into account those workers without pension plans, as almost 80% of Canadians work in the private sector and two-thirds of them do not have registered workplace pension plans.
Kelly said, "As big as the gap may seem, we are comparing two workers who do have workplace pension arrangements.
"It makes you wonder what that gap really is for the millions of Canadians in the private sector that have no workplace pension plan at all. How do they feel about their taxes paying for the gold-plated retirement of civil servants?"
The study found that to replace 70% of working income in retirement, a public-sector employee would have to contribute 7% of their salary. A private-sector employee would need to contribute 21% to receive the same benefit.
