My grandfather Mike Georgetti worked at a manual job until he could work no more and then, worn out, he retired without a pension. He had four kids and he and my grandmother had to rely on them to support him in his old age.
I was thinking of my grandfather on March 29 when the Conservative government announced in the budget that it will raise the age at which Canadians can receive Old Age Security (OAS) benefits from age 65 to 67.
Many workers are employed in physically demanding or otherwise stressful jobs from which they want and deserve to retire by age 65. Others are unable to work past that age due to illness, disability, or the need to care for a partner. These people want to retire but many are forced to stay in the workforce because they can't afford to leave. In fact, one in four persons aged 65 to 70 remain in the work force today, double the level a decade ago.
The real issue here is not about the age of retirement but rather about income in retirement. About one half of workers with medium level earnings will experience a serious drop in their standard of living when they retire. That is a disturbing prospect. OAS provides only a basic pension income of just over $6,000 per year. It makes no sense to scale back this small but essential element of the retirement income system, as the Prime Minister proposes to do.
Canadians have repeatedly been told that they can rely on a combination of public pensions and their private investments for a secure retirement. But it hasn't worked out that way. Canada's public pensions -- OAS plus the Canada Pension Plan -- provide a combined maximum income in retirement of less than 40 per cent of the average wage. That is one of the lowest earnings replacement rates in any advanced industrial country.
The theory has been that the remaining income gap can be made up by a combination of workplace pension plans and individual savings such as RRSPs. But the system has not delivered as promised. Two thirds of all workers no longer have access to an employer pension plan because employers either won't provide them or have shut them down. As for RRSPs, few people have been able to save enough because returns are low, due mainly to the money eaten up in high financial management fees.
We do have a looming pension crisis in Canada, not because people are retiring too early but because their combined pension and investment income will still see them retiring into poverty. Rather than attacking the OAS, the federal and provincial governments should be working together to improve our public pension system through a gradual expansion of the Canada and Quebec Pension Plans. The CLC, along with retiree and citizens' groups, has been advocating this option for several years now but the federal government has not been listening.
An enhanced CPP/QPP has many advantages. We can double future benefits for today's young workers through a modest, phased-in increase in contributions over a period of time. Pension experts say the CPP is actuarially sound for at least the next 75 years (meaning it is guaranteed to deliver as promised).
These plans are paid for entirely by contributions from workers and their employers rather than from tax revenues. They do not cost governments a cent. It is workers and their employers who ought to be the ones putting aside money now to ensure a decent income in retirement and an enhanced CPP/QPP will allow them to do so in the safest and most effective way. My grandfather would have said amen to that.
Expanding the CPP/QPP would also reduce future costs of the Guaranteed Income supplement, which is paid to low income seniors. We should think hard about the unfairness of the tax bill that today's young workers will face as more and more retirees are forced to draw on taxpayer-funded GIS benefits if we don't act now. In addition, an enhanced CPP/QPP would ease the pressure on provinces to support low income seniors and allow those jurisdictions to fund other hard-pressed social programs.
The federal government should hold off on its unilateral and ill-considered changes to OAS and agree instead to a national summit that would give serious consideration to the important issues of pensions and retirement.
Follow Ken Georgetti on Twitter: www.twitter.com/@CanadianLabour
PS: My sister who has been on welfare for 34 yrs, just turned 65, however she was able to keep her welfare rates and not have to drop to the OAS rate. She gets the equivalent of $45K a year, when you consider her fantastic (almost) free housing
The paradox is WE put these heartless religious nutcases in the office.
OAS amounts to about $500 a month and is providing much needed basic support to the poorest of our seniors. As citizens of this country, it is our responsibility to fight poverty as its existence should put us all to shame!
As for why people don't do this on their own, there are lots of reasons that don't fit into your simplistic analysis based on two data points. There's a reason why income tax is a payroll deduction after all. Most people couldn't be counted on to put enough aside to pay it once a year.
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With the average Canadian earning $46,000 a year, they are faced with a increased tax burden to support the public unions with their wages (25.0% higher then the average Canadian) defined benefits and pensions - ie teacher in Ontario, average wage $94,000, with an average pension of 67,000 a year, to go with their tied to inflation drug and dental bennifits.
These individuals continue to demand that we pay to support their lifestyle - sorry the gravy train is leaving the station.
The race to the bottom mentality is going to leave almost everyone in this country impoverished unless it's stopped.
How do you know he's not a working class person? Or is anyone who disagrees with labour a second class citizen?
He shipped the manufacturing base to other countries? And you've never shopped at Walmart or bought anything made in a foreign country? Sorry, buddy, YOU shipped those jobs overseas.
Harper and his crew are putting the death wish on all things Canadian! Parks, Pensions, OAS, Health Care Bulk Water exports; you name it.
If it appears on the Republican list of things that are hindering their business; Harper and his crew are on it; fast!
They are hooked at the hip with the Republican Parties and the Western Provinces!
http://albertathedetails.blogspot.com/2011/03/conservativerepublican-alliance-pnwer.html
And having little regard for the rest of Canada when one of their own gets in trouble they pulled out the stops when the Oil Companies were challenged for having more Americans (Illegal) on their payroll than Albertans. http://albertathedetails.blogspot.ca/2012/03/new-canada-immigration-plan-in-action.html
Aside from the fact that this change should have been a central campaign issue because of its far reaching consequences, if there is no public outrage, then Harper will be encouraged to start tearing apart other universal programs, like out healthcare system.
Things that will affect Canadians like this should be open to debate, and not rammed down our throats. There may in fact be a lot of good reasons to change the retirement age, but that's not the point. Almost nobody asked for this change, and it seems very few people welcome it, and yet Harper inflicted on us without any meaningful dialog.
This sort of autocratic behaviour is why it will be a pleasure to vote him out of office in the next election, and then we can fix the damage he is doing to Canada.
If through the miracle of science we end up pushing the average life span of a person to 130, but the age of retirement doesn't move at all, then I don't see how pensions can possibly function; because you're pretty much suggesting that we support people through half of their lives.
Pensions used to only have to support an individual on average for about 0-10 years. These days it's in the 0-30 range. People are living longer, and more people are hitting the retirement age. Medical technology presses on. When the boomers hit their 80s twenty-thirty years from now, the average life span of Canadians might be hitting 90.
The young workers who are entering the workforce now? Well when they hit retirement age, the average life span of Canadians may very well be 100 at that point. Do you honestly suggest that the retirement age remains at 65 or 67 at this point?
The only way this doesn't pan out is somehow the average life span of Canadians suddenly levels off or even drops; but the only way this happens is if we let our health care system implode.
The idea that people are living longer is simply a myth. In fact, a study was recently released that shows the average life span of women in the US is falling; it is likely the same here in Canada. There have been other studies that show that overall, working people do not live as long as people who have white collar jobs or are wealthy. Really, nothing has changed. This is simply a myth being used to once again justify sticking it to working people while move more and more of the shrinking pie to a small few. Your assertions are baseless. Combined with the fact that it has already been explained that there is no "crisis" in CPP or OAS, this Harper plan should be seen for what it truly is, simply another Righ Wing attempt to stick it to ordinary people one more time.
Its shameful!