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Electoral Backlash Over Pension Reform?
Submitted by Leo Kolivakis, publisher of Pension Pulse.
Norma Greenaway of the National Post reports, Electoral backlash threatened over pension reform:
Federal and provincial governments will pay a political price if they fail to turn a vague commitment made in December to pursue pension reform into a concrete plan to bolster Canadians' retirement savings, reform advocates are warning.
The Canadian Labour Congress and the leading advocacy group for seniors, known as CARP, vow no-holds-barred campaigns to persuade the Harper government to commit to pension reform in its March throne speech and to keep provincial governments on the case.
They say Finance Minister Jim Flaherty and his provincial counterparts cannot keep getting away with calling for more study on reform options and public consultation, as they did after their meeting in Whitehorse in December.
"That is a technique of governments that don't want to make any changes," said Susan Eng, CARP's pension specialist. "They wear people out with low-level consultations, asking you questions that they have already answered."
Canadians are ahead of the politicians on this issue and they are ready to get down to "brass tacks" on the design of a plan to fatten retirement nest eggs, she said.
Federal and provincial officials have not yet decided what shape the public consultations will take or who will do the research, a federal official said.
But they are facing a spring deadline. Mr. Flaherty told reporters in Whitehorse the ministers "will look at specific recommendations concerning the options" at their next meeting in May.
Following the Whitehorse talks, British Columbia and Alberta said they were putting on hold plans to go it alone with supplementary pension schemes.
Ken Georgetti, president of the Canadian Labour Congress, said he was disappointed by the noncommittal nature of the Whitehorse outcome, but was heartened pension reform is still on the table.
"They didn't shut it down and that leaves us some hope," he said.
The congress has made pension reform its top priority for 2010 and Mr. Georgetti said he views Prime Minister Stephen Harper's decision to suspend Parliament until March as a bit of a bonus.
"It gives us more chance to work on this issue because we're not distracted by what the government is doing in Ottawa," he said. "Our staff is working full time on this."
Mr. Georgetti predicts pension reform would be a major issue in all future federal and provincial elections, and says politicians would be foolish to ignore calls for help, many of them coming from aging Canadians concerned about how their children and grandchildren will save enough money to finance a decent retirement.
"The grey hair vote is a very important vote," Mr. Georgetti said.
Ms. Eng said older Canadians are stepping up to the lobbying plate even though they know they stand to gain little, if anything, from reforms being discussed.
"The people in our group are already retired. Their goose is cooked," Ms. Eng said.
"Really, what they are saying is ‘take the benefit of our advice.' "
The advice? Create a new and attractive savings track for Canadians who do not have workplace pensions -- a benefit that is becoming increasingly rare.
About two-thirds of private-sector workers are without workplace pensions, and the number of employers offering such plans has been shrinking by the year. A 2007 study by the Canadian Institute of Actuaries also said only about one-third of Canadian households were saving at levels capable of generating sufficient income to cover non-discretionary expenses in retirement.
Mr. Georgetti said reforms should focus on future retirees.
"We should start putting in place now an adequate system of retirement savings so that the younger generation will not find themselves in the position that older workers find themselves today."
The Canadian Labour Congress calls for a gradual doubling of Canada Pension Plan contributions over seven years to double the maximum CPP benefit to almost $22,000 a year.
CARP advocates a mandatory supplementary pension plan separate from the CPP that would allow employers and employees to build an even better retirement income.
Ms. Eng said, however, her group would support the Canadian Labour Congress proposal as a first step toward a broader reform.
Mr. Georgetti says he's convinced the congress proposal, which is strongly opposed by banks and financial firms that sell tax-assisted savings vehicles, will win broad public support.
"It's the cheapest of all the options, it's the most effective, it's indexed and it's portable," he said.
In response to CARP's request, Terence Corcoran wrote an article, Stop the music! CARP speaks. I quote:
In her statement yesterday, Ms. Eng provided CARP’s rationale for what is called a new “Universal Pension Plan” to be introduced by Ottawa and/or the provinces. “Not only is there real public pressure for pension reform to re-balance the interests of employers and employees but there is now general realization that 11 million Canadian workers don’t even have pensions to worry about, that one in three Canadian workers retire without any retirement savings. And the thousands of people who thought they had safe pensions now see that their retirement dreams may never be realized.”
This is language — 11 million Canadians don’t have pensions, one in three workers without “any savings” — that drives CARP membership up and sounds good in Classical FM radio clips, but the numbers are bogus misrepresentations of the Canadian pension system. The Ontario NDP claim that Canada has a retirement crisis in which “six out of 10 people” have no retirement plan is just as preposterous.
According to Ms. Eng, retired Canadians want “real action.” There is, she said, a “growing consensus” for a new national retirement savings vehicle that would add another national pension system, a “universally accessible, affordable saving vehicle,” on top of the existing Canada Pension Plan and Old Age Securitiy system.
The implication is that the vast majority of Canadians are heading into retirement nightmares and need to be bailed out by another government income redistribution system — an implication that is not borne out by a half dozen studies recently commissioned by Ottawa.
In a recent report on the studies assembled by Jack Mintz of the School of Public Policy at the University of Calgary on behalf of Finance Canada, the Canadian pension system looked far from being a nightmare. The studies found Canada’s pension system to rank well above the OECD average in terms of providing income security and replacement for the vast majority of Canadians. There are certainly gaps, although exactly where those gaps are remains an unresolved issue.
CARP and other advocates of a new wave of government pension intervention are big on exaggeration and rhetoric. So far, at least, Ottawa and most of the provinces are holding off, promising only to look at the issue again in the future. Maybe with facts to work with, needed pension reform could more usefully proceed.
For a smart guy, Mr. Corcoran just wrote a superficial article. Instead of critically analyzing the facts concerning the crisis in the making, he accepts Jack Mintz's report as the gospel on pension reform. This is sloppy reporting from someone who should know better.
And I'm not advocating that we blindly accept CARP's position without questioning the costs. We need to examine all policies and the costs to society. Some very tough choices lie ahead, requiring compromises from all stakeholders.
But to get the pension agenda moving again, our politicians need to get back to Ottawa and back to work. Proroguing Parliament at a time when more and more Canadians are feeling anxious about their future could backfire in a spectacular fashion and lead to even more political uncertainty. This is an outcome that Canadians can live without.
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No economic base, no manufacturering base not good for the pension ponzi and welfare schemes set-up in the Western Countries. The long term effect of closing factories and shipping the jobs overseas just so a company can improve their EPS is starting to be realised and will only get worse. You cannot hide the fact you farted once released.
"Not sure where the last sentence came from but I did enjoyed it."
Gimp,
From the look on his face Mr. Greenaway may be unsure of your last senetnce as well.
"The system is broken", better send in Timmy G.
The pension crisis has arrived and it will be the biggest issue facing policymakers in the developed world over the next decade. Stakeholders need to review everything, make some tough decisions, bolster pension governance, or else they risk creating a generation of paupers who will retire in abject poverty. The system is broken and pension promises are not going to be kept. If politicians ignore this crisis, hoping that it will magically disappear, they are in for a rude awakening.
While the pension crisis is very real and deserves attention, it was a long time in the making. The underlying problem of an insufficient productive economic base to support a giant bulge in the aging population will not be cured by mandating an additional layer to our retirement plans in the immediate future. If it's true we are talking about reforms to secure the retirement plans of the children and grandchildren, as was suggested, then there is ample time to act and any shortterm political maneuvre is inconsequential and should not be a hot button issue in an upcoming election. If however this is about preserving the lifestyles of the current crop of pensioners, then I can understand why CARP is pressing this issue now.
How can there be Electoral Backlash if the government never convenes again?
Leo;
sounds like the Gov. up there in the can. Listens a tiny bit better than down here in the u.s. Calls to congress and representatives were 300 to1 against the bailout. Calls and marches have increased all year starting with the stimulus and now calls are 1000 to 1 against healthcare. NO one seems to be listening. That's a shame because the time is coming, that the folks in washington will dearly wish they had. Soon government is going to get what they deserve. Good luck with those pensions. Down here they are in the process of turning 401k's into government annuities. Anyone who relies on the government for anything deserves what they get.