Most Canadians depend on public pensions – Old Age Security, the Canada/Quebec Pension Plan and Guaranteed Income Supplement – to provide for their basic needs in retirement. Unfortunately, public pensions currently barely bring most older Canadians up to the poverty level. A large proportion (over a third) of seniors have no significant additional retirement income, from workplace pensions or RRSPs and other savings.
As employers cut back on workplace pension coverage, a rising share of older Canadians will face a serious drop in their living standards at retirement.
For a brief period in late 2010, it looked as if we were going to get a far-sighted and long-overdue improvement to public pensions. A concerted campaign led by the Canadian Labour Congress brought the issue to the fore for the first time in almost thirty years, and brought the federal government and the majority of the provinces to a consensus on a phased-in improvement of the Canada Pension Plan retirement benefit. Changes to CPP require the agreement of the federal government and two-thirds of the provinces with at least two-thirds of Canada’s population.
Days before federal and provincial finance ministers were to meet in December, 2010, the Harper Conservatives reversed their position and withdrew their support for CPP improvements. They instead put forward a bank-sponsored proposal for something called Pooled Registered Pension Plans – essentially another voluntary savings scheme like RRSPs, with all of the same problems — low take-up rates, high individual risks and exorbitant fees (See The Big Bite).
CPP improvement is far superior to these schemes – it is universal, low-cost, efficient and provides a defined benefit promise. It is the only credible solution to our long-term retirement income problem, but given a choice between the interests of Canadian families and protecting bank profits, the Harper Tories came down on the side of the banks.
Unfortunately, the election of a Conservative majority on May 2 makes the task more difficult, but the lack of a major shift in recent provincial elections means that a majority of provincial governments should still be backing CPP improvements.
We need to keep up the pressure. We can’t afford to wait another thirty years.