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Canada's Retirement Poverty Crisis Is Avoidable If We Act Now

Cutting pensions is a short-term gain, but it results in long-term pain for many.

08/17/2017 15:18 EDT | Updated 08/17/2017 15:18 EDT
Dean Mitchell via Getty Images

Decades of attack on the stability of pensions in Canada is nothing short of a crisis looming over the future of our economy, and it must be addressed now before too much damage is done.

We are already beginning to see the effect of past pension cuts.

The stark fact is that fewer and fewer Canadians can look forward to a decent pension. As well, with all the pressures of daily life and raising families, few of us find it possible to save for retirement.

Consider that just over 20 years ago, only 3.9 per cent of seniors lived in poverty. By 2015, the rate was 14.3 per cent — something to be ashamed of, and the situation is unlikely to get better as pensions continue to be attacked.

Seniors spend their pension benefits on the day-to-day things they need: food, clothing, shelter, maybe some travel and gifts for the grandkids. It's the kind of basic, everyday spending that keep shops open and companies profitable. When pensions are cut, or in some cases eliminated, that spending drops, and the economy suffers.

What is truly costly is setting up a system in which seniors in the future will not have the money to cover basic living costs, let alone help to drive a consumer economy.

It's pretty basic, really. A consumer economy needs consumers, including senior consumers. And that requires decent pensions.

As well, those with good pensions tend to rely less on public services. This benefits us all, and must be a priority for policymakers and employers.

Employers and many politicians will tell us that decent pensions are too costly. Labour leaders hear that at the bargaining table all too often. But what is truly costly is setting up a system in which seniors in the future will not have the money to cover basic living costs, let alone help to drive a consumer economy.

All too often, employers take the shortcut of cutting pensions to address immediate issues, cutting the future incomes and spending ability of the next generation of retirees in the name of cost savings today. It's a short-term gain, but it results in long-term pain for many.

This is an issue not just for workers and their employers, but governments as well.

Our federal government has done some good things, including returning the age of eligibility for the Old Age Security to 65 and boosting the Canada Pension Plan, but other measures have not been as positive.

Bill C-27, now stalled at second reading in the House of Commons, would allow defined benefit pension plans (which guarantee a decent pension for life) to be converted to target benefit plans in federally regulated sectors and Crown corporations. This means that workers who spent their working lives building a secure pension, and planning their retirement accordingly, could suddenly see it pulled out from under them.

Mark Blinch / Reuters
Former employees and pensioners of Nortel Networks Corp gather in front of Queen's Park to protest the loss of pensions and severance pay in Toronto, Ont., Oct. 7, 2009.

While the future of C-27 remains unclear, we've seen what can happen with target plans.

Just last week, Unifor was forced to take drastic action after Northstar Aerospace refused to top up pensions for its workers and retirees after a deficit in its pension that will result in a 24 per cent cut to benefits because the company is closing. The union occupied the plant, and before being ordered out by the labour board, we were able to make the issue a national story.

The occupation managed to put pensions on the radar of many Canadians, who learned about a big, profitable company that could easily afford to top up its promised pensions but was simply choosing not to do so. Legally the company can get away from it, but that's not that point. Corporations should morally and ethically have a role and a responsibility to give seniors their fair share. It's only right, especially when you consider the hefty profits that companies such as Northstar or Sears make on the backs of workers after years of service.

This is just one incident, but it illustrates two vital issues: the threat posed to pensions, and the need to make the public aware. Both must be addressed.

Rebecca Cook / Reuters
Unifor Local 444 union members picket outside the Integram (Magna) Seating plant after voting to reject a tentative agreement in Tecumseh, Ont., Nov. 6, 2016.

It is vital to get the message out about the importance of good defined benefit pension plans to workers, employers, policy makers and the general public — many of whom do not yet have a decent pension themselves.

The labour movement will continue to take up this fight. Not just Unifor, but all unions and labour bodies will need to push for decent pensions to ensure a stable future for our economy.

Organized labour can also help by setting a good example. At Unifor, we encourage all staff to retire by age 65, even though the law no longer requires it. This is because we believe that workers have a responsibility to make way for another generation.

As well, when workers know that they will retire by age 65, and will need to ensure a strong income for, hopefully, decades to follow, they fight harder for decent pensions during their working lives — and that can only be a good thing.

It's a fight we cannot back away from, or afford to lose.

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