THE BLOG

For Private Sector Workers, CPP's Bridge Benefit Leads to Nowhere

08/30/2012 05:09 EDT | Updated 10/30/2012 05:12 EDT

Most Canadian private sector taxpayers are blissfully unaware of the existence of a wonderful bonanza public sector workers enjoy at their expense -- namely, the Canada Pension Plan bridge benefit. When the federal government announced in its 2012 budget that a few years hence Canadians would have to wait until the age of 67 to collect Old Age Security (OAS), most grudgingly accepted that this was necessary to permit the proper funding of the plan and keep it viable for future generations.

But if people were fully informed about the special treatment accorded to public sector workers, one aspect of which being the bridge benefit, they likely would have been less willing to jump on the bandwagon of later retirement for themselves.

A private sector worker who has contributed to the CPP is entitled to begin collecting benefits at age 60, but at a reduced benefit level than they would receive if they waited until they were 65. The reduced benefit level will continue throughout their retirement. No such penury for a public sector worker, who can avail themselves of the Bridge Benefit as early as age 55, which basically means they can top up their CPP until they are 65 with no CPP benefit reduction.

And don't forget that public sector workers generally have much more generous pensions to start with than the private sector worker who's footing the bill.

At the federal government level alone, the bridge benefit costs over $100 million annually. This translates into over $12,000 per year for each federal government employee who chooses to retire earlier than 65. The bridge benefit also exists in most provinces for public sector employees, so the total costs are significant. Over the next decade or so, the costs can be expected to get even higher as the baby boom generation retires in large numbers.

There are many costs embedded in our public sector bureaucracy that need to be re-examined in the current context of cash-strapped governments, overtaxed businesses and individuals and sluggish economic times. When the 80 per cent of Canadians who work in the private sector are being asked to wait until 67 for things such as OAS, it is pretty tough to justify expensive, unfair give-aways such as the Bridge Benefit.

Virtually all countries around the world are asking their citizens to work longer before collected pensions and other benefits as longevity improves and government debt becomes unsustainable. But such requests should be made of all citizens, not only those in the private sector. Getting rid of the Bridge Benefit should be a no-brainer, and the first step in a process of equalizing the treatment of public and private sector players.