Pension Reforms Needed Now

The Toronto Star is reporting that the Ontario Teacher's Pension Fund is experiencing a $12.7 Billion pension shortfall:

http://www.thestar.com/Business/article/408941

The situation, I believe, is not restricted to teachers. All pensions are under pressure to meet their pension obligations due to smaller returns and contributions. Retirees are drawing out more money than is being put in. In fact, many retired teachers today will collect a pension for more years than they actually worked!

Pensions were not designed for this. I'm no expert but I think the original pension plans were designed to pay out for 10 to 15 years but now it's common for 25 to 30 year payouts. Add to this an increasing number of retirees and fewer contributors (read "Boom, Bust and Echo" by David Foot) and pensions will have serious problems in the future. Already today's workers are being asked to pay a higher percentage of their paycheck into the pension plan with the understanding that they'll get lower benefits than current pensioners. This is outrageous! (Not to mention that today's new teachers have significantly higher debt loads and worse job prospects than their pensioners did.) Worse, pensioners frequently take jobs after they retire and, in the case of teachers, actually interfere with new teachers' ability to get a job in the field!

One proposal is once a pensioner reaches a certain age (say 60) they will get a portion of their pensions clawed back if they decide to take a job. In other words, there is a disincentive to work after retirement. This will provide more paying jobs for the young who contribute to pension plans. Pensioners who are willing and able to work would be encouraged to take volunteer positions - working for fulfillment instead of money.