The government says public sector employees retiring in 2017 and later will have to pay half of their benefits premiums for life, health, dental and vision coverage.
Currently, the government pays 100 per cent of the premiums.
It says it will also change the eligibility period for retiree benefits from 10 to 20 years for workers who are hired from Jan. 1, 2017 onward or who have less than a decade of pension credit by that time.
The government says current retirees won't be affected by the changes, which it says will bring retiree benefits in line with other public sector organizations and save the province $1.2 billion over five years.
The announcement comes a week after the federal government proposed changes that would have its public sector retirees pay for half of their premiums, up from the current 25 per cent. Those changes would affect current retirees.
The Liberals also note that employees in Saskatchewan, Alberta, Manitoba, P.E.I., New Brunswick and British Columbia all pay 100 per cent of premiums if they elect to participate in benefit plans following retirement.
"We must continue to manage costs in a responsible and fair way," Finance Minister Charles Sousa said in a release.
"With half of all government spending going to compensation, including post-retirement benefits, managing these costs is essential to ensuring sustainable public services that Ontarians rely on."
The Ontario Liberals, who are facing a nearly $12-billion deficit this year, have been eyeing benefits and pensions as they look to curb costs and eliminate the red ink.
They say there are more than 84,000 active members of the Ontario Public Service and other employers enrolled in Ontario Public Service pension plans, and about 3,000 to 4,000 employees start collecting a pension and receive retiree benefits each year.