Today, Canada's finance ministers meet in Vancouver.
The item that will mean the most to working people will be the debate over whether to increase your income in retirement by strengthening the Canada Pension Plan (CPP). Ontario will arrive at the meeting to advocate for the largest boost in half a century to the benefits that retiring Canadians will receive. Here's why.
The CPP was created in the 1960s to help retiring Canadians maintain their standard of living. It worked. And with supports such as Old Age Security, the Guaranteed Income Supplement and provincial supports such as Ontario's GAINS program, the percentage of seniors living in poverty after the CPP's creation has dropped significantly. Workplace pensions in both the private and public sectors also grew stronger in the generation that followed. This not only allowed people to retire with dignity, it actually boosted our economy by providing seniors with a higher level of income and making Canada a more attractive and predictable destination for both employers and employees.
Today, however, the CPP's age is showing. It was designed for yesterday's economy. Although benefits are indexed, and so have increased gradually over the years, financial support from the CPP simply will not be enough to help most people. With the average CPP payment amounting to about $6,600 a year, too many working Canadians will find that their reward for a lifetime of hard work will be to face a lower standard of living as they retire.
This is happening for a number of reasons. First and foremost, as families feel stretched financially, they're simply not able to save enough. Perhaps most important is the fact that workplace pensions are disappearing. For two-thirds of Ontario workers in the private sector, their employer offers no pension plan. It's even more discouraging for young workers in Ontario -- 75 per cent do not have a workplace pension plan.
For most families today, the CPP is the only predictable source of income for their retirement.
And many workplaces that do offer pension plans have taken steps to remove the guaranteed annual retirement benefit, meaning that the income that would have been there for you each year upon retirement will be less -- and much less predictable. For most families today, the CPP is the only predictable source of income for their retirement.
Fifty years ago we fixed the problem through vision and leadership by creating the CPP. Today we need to fortify the CPP to give future generations of Canadians confidence that they can live with dignity when their working life comes to an end. It's a proven and sensible approach.
For all these reasons, Ontario has long advocated for action at the national level. In 2013 we called on the federal government to lead a national effort to enhance the CPP. The government of the day refused to act. That's why our government campaigned on a commitment to introduce the Ontario Retirement Pension Plan (ORPP) -- an alternative way to ensure that all Ontario workers would be covered by a meaningful pension and see their pension benefits increase.
Work on the ORPP continues. It remains a key part of Ontario's plan to grow the economy and create jobs.
However, last fall Canadians elected a new federal government that shares Ontario's commitment to enhancing retirement income security. The prospect of a national solution, with an expansion of the CPP, has re-emerged. We feel optimistic that an agreement is possible and we hope it would include a substantial-enough increase to pension benefits -- the amount that each retired worker would receive -- so that we could proceed with the national solution.
Critics argued that the time was wrong to create the CPP, that it would harm economic growth and slow business. That was shown to be wrong then. It is just as wrong now.
But, if a national solution is not possible, we won't let the people of Ontario down. That's why we are preserving our ability to implement the ORPP. One way or the other, we will see to it that workers in our province can retire with greater security, improved benefits and a better income.
We take two clear priorities into this meeting. First, pension benefits must increase demonstrably -- roughly two-thirds of what we would achieve under the ORPP would be acceptable. We are also open to exploring a range of CPP enhancement options -- as long as the agreed-upon solution provides substantial earnings replacement benefits in retirement that are in line with the level of adequacy of the ORPP.
Second, we must act now. We need to take action today and see implementation of a CPP enhancement begin to be phased in starting in 2018. This aligns with our plans for the ORPP. In the 1960s, critics argued that the time was wrong to create the CPP, that it would harm economic growth and slow business. That was shown to be wrong then. It is just as wrong now.
Ontario is willing to be flexible and work co-operatively. We will do everything in our power to secure a national deal to expand the CPP and help improve retirement income for future retirees. That outcome is what we prefer. But if it proves impossible to achieve real progress that makes a real difference, we will proceed with the ORPP to protect future generations.
In the end, there is only one goal: to help people who have worked hard their entire working lives have the means to enjoy a liveable retirement. In the past, our country has taken action to make it possible to realize this goal. Today, we must take action to make it possible for the future.
The Hon. Charles Sousa, MPP
Minister of Finance, Province of Ontario
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If going to school has been a long-time goal of yours but it never happened for you, it’s never too late to consider going back. As of two years ago, many universities have waived all or part of tuition fees for those over 60 years of age. Of course, there are restrictions and the amount of tuition waived differs for each institution, and ultimately depends on which program or post-graduate program you’d want to take. It’s a great opportunity that is far more affordable than the alternative, which is to pay full price for tuition year after year. If you were put in a sticky situation where you had to drop out of high school, there’s a solution for that, too. Plenty of adult education centres will help retirees get their high school diploma, as was the case for Cathleen Kay Eddison who, at 89 years of age, became British Columbia’s oldest high school graduate in 2013. It’s never too late to learn!
Somewhere between our childhood and growing up, we may have forgotten about our personal dreams because life just kept getting in the way. But now that you have the time, money, and health, using this time to actually follow your aspirations is a real option. After retiring from his business in 2005, retiree Archie Hood — a self-professed wine lover — went back to school and worked his way from the bottom rung of a winery to chase his dream of becoming a sommelier. Sandy and John of Toronto downsized to a condo after retirement and started ticking off their travel bucket list, and have visited New York, Chicago, and have plans to see Boston and Europe as well. No matter how outlandish your dreams seemed in the past, there’s never a bad time to get your finances in order so you can make your dreams a reality.
It’s the unfortunate truth that retirees and senior citizens are often overlooked and underrepresented in all aspects of life, including in the media, need-based-care, and especially politics. Gone are the days that retirees suffered in silence; large advocacy groups such as the National Association of Federal Retirees (FSNA) make sure that retired seniors have a voice in politics and fight for better health care plans and finances that will benefit them. If you’ve wanted to get political on your demographic’s behalf, it really is as easy as supporting advocacy groups that look out for your best interest. Just last year, the FSNA group challenged the government’s cutbacks to benefits and made national news — proof that there is indeed power in numbers.
As long as your finances and time are in order, live that lifestyle that you were too busy to in your younger years. Live abroad like Phil and Marg Timmons, a retired couple from Barrie who relocated to Arizona and spend their days golfing all year round near their property that is only minutes away from convenient malls and amenities. Fred and Marg Ford simply turned down the option of owning a traditional home after retirement and instead bought a mobile home in sunny Florida, where they now live. If you have the means, even consider moving into a retired seniors only retirement community, like this one they have down in Florida where the fun never stops and everyone parties like it’s 1959.
Follow Charles Sousa on Twitter: www.twitter.com/@SousaCharles