Members of the Prince Edward Island Legislature’s Public Accounts Committee were briefed yesterday on options for tackling the funding shortfall in the province’s public sector pension funds, which has hit $436 million.
The presentation given by Terry Hogan, manager of the provincial pension funds, followed last week’s news that PEI finance minister Wes Sheridan has appointed a working group of bureaucrats and representatives from public unions to study the funding problem.
According to a CBC report, Hogan explained to committee members that the funding issues are rooted in flat investment returns over the past several years, as well as a 17% drop in the value of investment assets in 2009. Longer life expectancies are also driving the plans’ long-term costs higher, he said.
The $436-million shortfall includes an unfunded liability in the provincial teachers’ plan of more than $160 million, and a funding gap of about $275 million in the civil service pension fund.
Under provincial legislation, taxpayers are responsible for covering roughly half of that shortfall ($231 milIion). Sheridan, who has said he expects a solution to be put in place by the fall, last week announced that the government would make annual payments of $23.1 million over the next decade to help close the gap.
Other solutions being examined by the working group include increasing the minimum age limit for pension eligibility and increasing member contributions to the plans.