Pension reform continues to hold interest across the country, especially given the willingness of the federal Conservatives to at least talk about expanding the Canada Pension Plan (CPP). Pundits and politicos are weighing in now with blunt talk of "voluntary" or "mandatory" enhancements to CPP. Neither may be exactly what Canadians want. Here's why.
The pre-election debate on improving the Canada Pension Plan is important and overdue. Despite the Harper government's reluctance, there is a broad consensus that, as a national newspaper said recently, "raising mandatory CPP contribution rates and boosting future payouts are the most prudent, most effective and least costly fix." But that's not enough.
A new report came out this week that reiterates what we've heard from other sources a few times now: Canadians aren't saving nearly enough for retirement. The Deputy Chief Economist of the CIBC warns that without pension reform now, younger workers today will see a steep decline in living standards as they retire. The Conservative government has recently announced it would like to have a dialogue with Canadians about a potential expansion of the Canada Pension Plan (CPP). While this, in itself, is a purely political action -- since it commits the government to nothing -- it is worth looking at what the possible outcomes might be.
A government with a hate-on for its workers doesn't just go after those still employed; it also revels in undermining the security of its former workers: us retirees.This year has seen the implementation of an additional $500 payment for my healthcare plan. Despite protests from our retirees association and from the unions, the government effectively broke our contract and unilaterally imposed the extra charge.
Recently, Canada's military has come under deliberate, sustained attack. In fact, our Forces may already have been vanquished. Not by an enemy, but by the nation it defends. Faith in Canada's support is the one thing our Forces absolutely, positively must have to be effective. But that was taken away last year, bringing the days of selflessly charging into danger to a crashing halt.
I might be betraying my demographic but I think it's time we seniors started asking for less. For years now, those in the over-60 age group have been making out like bandits while the younger generations struggle to make ends meet. Unlike in years past, there are now relatively few seniors in developed nations suffering in poverty. The iconic image of an aging widow living on cat food is today largely a myth. Older folks, for the most part, live comfortable lives.
Let's face it: many people work better on a deadline. This is the same mindset that leads perfectly reasonable adults to the conclusion that saving for retirement can wait until tomorrow, until they get a raise or have taken the next vacation, or until they turn 30, 35 or 40. If you are approaching 40 and have procrastinated, it's time for a gut check.
The experts say that the average career in one company is less than seven years. Essentially that means you could be at four or five companies throughout your career. And like you've just discovered, that could mean you may have several RSPs, pensions, employee stock plans or other savings accounts associated with those old jobs.
Reduce the length of time pensioners collect. The Auditor General noted that one of the biggest problems with the pension plans is that pensioners are living longer and collecting more and more benefits. It's not likely they will be willing to voluntarily give up their entitlements but steps can be taken to lower their life expectancy.
It's that time of year again, when local governments across B.C. grit their teeth and post their annual statements of financial information for all and sundry. Depending upon your perspective, they're either a veritable treasure trove of news stories or a minefield of PR disasters waiting to happen.
In a speech in Toronto a couple of weeks ago, Kevin Sorensen, Minister of State for Finance, introduced details of a new "hybrid" pension plan proposed for all federal workers and other corporations under federal pension regulation. He referred to these proposed plans as Target Benefit Pension Plans.
Now, in Australia, you get a lump sum pay-out (hardly any Aussies annuitize their lump sum). Once again, you have to manage your retirement on your own. Now, even if you knew exactly when you were going to die, this would be difficult, but when you have no idea of your personal life expectancy, this is a problem beyond the capabilities of the average Canadian.
Canadians are certainly living longer, healthier lives but not everyone. Twenty four percent of seniors have multiple chronic conditions and take on average 5 different prescription meds. Older workers who lost their jobs in the late 1990s had three times as much difficulty getting new ones as their younger counterparts and they either got jobs within the first two years or not at all.
The employer groups that vehemently oppose CPP hikes mostly don't offer any pension support for their employees. And their arguments are increasingly hysterical. They are still calling any CPP increase a "job killer" and managed to convince the junior minister of Finance to parrot their talking points.
Faced with the level of debt many seniors are currently carrying and the significantly underfunded retirement savings of many Canadians, the "fraying" of the CPP is a matter that needs addressing. If left unchecked, its impact could be on the national economy and not just the individual families affected.
The solutions are to either improve government transfers or to improve access to viable retirement savings vehicles. So what has Canada done? The opposite. In the name of more sustainable government budgets, the eligibility age for OAS has been raised from 65 to 67 leaving those who cannot hang on for the extra two years without a safety net.
Just months ago, the Minister for Veterans Affairs stood in a Legion in London, Ontario and promised members that soldiers would no longer be cut loose. Clearly, that practice continues. I am calling upon the government to stop giving weak excuses and apologise to these Canadian heroes who have been dismissed because of the Conservative government's efforts to balance the budget.