This summer, we have witnessed a study in contrasts in how to tackle the looming issue of retirement security, one of the biggest social and economic issues of our time. One story happened here in Ontario; the other, at the White House.
The first story came in the form of a letter from Stephen Harper's finance minister to the province of Ontario. The federal government, said the finance minister, will not help Ontario in any way in implementing the Ontario Retirement Pension Plan (ORPP). It will not amend legislation. It will not allow access to the Canada Pension Plan's (CPP) efficient administration system. It will not even share data with the province.
"Take a hike," was the federal government's basic message. We will not help you improve pensions unless you do it our way. And our way is simple: Canadians should do it themselves. Just figure it out.
There is no retirement crisis, says the Harper government. Never mind that our mutual fund industry has among the highest fees in the world, while our best public pension funds have among the lowest costs despite excellent performance. Never mind that the capital markets are increasingly tilted against the interests of ordinary people. Never mind that employers have been abandoning defined-benefit plans for decades. Never mind that some of the most credible researchers in the country -- including Michael Wolfson, who built the federal government's most sophisticated tools for modeling the retirement security system -- have called for a significant enhancement to the Canada Pension Plan.
Meanwhile, south of the border, President Obama convened a once-in-a-decade event called the White House Conference on Aging. Thousands participated from across the country, including hundreds of members and the international leadership of my union, the Service Employees International Union (SEIU). Among the key themes of the conference was retirement security.
Unlike the Harper government, President Obama acknowledged the challenge: "In today's economy," he said, "saving for retirement has gotten tougher." Private pensions have disappeared and purely voluntary savings schemes tend to work mainly for the wealthy, not the lower or middle classes.
The outcomes from the President's conference included a range of federal measures to enhance retirement security.
Perhaps most importantly, President Obama praised a growing tide of state government efforts to improve retirement. He also offered the federal government's full support, calling on the federal labour department to issue rules to promote state-level pension innovations that will make it easier for workers to save for retirement in a secure and cost-effective manner. In other words, President Obama has taken a constructive and supportive position, in contrast to Stephen Harper's on this important issue.
More and more states have stepped up to help fill the pension gap left from private-sector employers abandoning the space. Referred to by some as the "Secure Choice" pension, such initiatives are based on the idea that public-sector pensions could be the basis for solutions to the retirement security crisis in the private sector.
According to the Georgetown Center for Retirement Initiatives, five states have enacted legislation enabling state-sponsored retirement savings plans and at least half of U.S. states have considered proposals to either study or establish such a plan. This includes states with both Democratic and Republican leadership, including traditionally GOP states such as Kentucky and Utah.
Obama and dozens of U.S. state governments have figured something out that Stephen Harper hasn't. Tackling the retirement security crisis requires collaboration and practical solutions, not partisanship and ideology. Ontario's government, which is showing bold leadership by moving forward with the ORPP, has figured this out, too.
Practical collaboration is at the heart of Canada's past successes in retirement security. Putting the Canada Pension Plan on a sustainable path in the 1990s required governments of three political stripes to work together. Building Canada's world-leading public pension plans -- including the Healthcare of Ontario Plan, which our union is proud to have helped found and continues to sponsor -- required collaboration among employers, unions, governments and some of the best investment minds in the country.
The sooner we have a federal government that can put aside its partisanship and start to work constructively with others, the sooner we'll have real pension solutions that will help workers, governments and the economy.MORE ON HUFFPOST:
A Chinese proverb says "the best time to plant a tree was 20 years ago. The second best time is now." If the balance on your RRSP, RESP or savings account is a big fat zero, don’t waste your time worrying about all the money you didn’t save — put your energy into coming up with a budget that will allow you to contribute to you savings while supporting your lifestyle.
This is such a simple and obvious tip that we almost feel bad putting it in here, and yet so there are still many people who aren’t taking advantage of this handy tool. Set up a saving program through your bank that automatically transfers funds into some sort of saving account each month. It’s a good idea to have this money transferred as soon as payday rolls around, so you won’t even notice the transfer. This is an easy habit to make (set up the process once and you’re done) that will have lifelong benefits.
Registered Retirement Savings Plans and Registered Education Savings Plans have been institutions for financially-conscious Canadians for decades, but they’re not the only options available. Tax-Free Savings Accounts (TFSAs) are a worthy competitor for your money and as Money Sense points out, they may be a better option for you if you have high-interest debt or are a low-income earner. You should also consider doubling-up by investing the tax refund you get from your RRSP into a TFSA to earn interest. Whatever your goals and situation, do your math before you commit to a savings plan.
One asset that rarely ever loses value is real estate, so if you’re struggling to save for the future, Money Sense suggests that you consider cashing in on your home by downsizing and converting that cash into retirement funds.
"There’s no better way to provide for your children’s financial future than to take care of your own financial present," says the Financial Post’s financial planner Jason Heath, and he’s right. Take care of your own financial present before stressing about the future; there’s no point in struggling to put thousands of dollars into savings when you’re wasting money paying high interest rates on credit card debt.
If talking about investments makes your head spin, make it easy on yourself by speaking with a financial advisor to help you make the most out of the money you’re putting away. Most bank branches are staffed with accredited financial advisors that you can meet with, regardless of how much you have to invest. The Financial Consumer Agency of Canada also has some practical advice on how to find a trustworthy and accountable financial guru.
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