Reforming the Canadian Pension Plan
As part of my regular and union work I attended two major learning events about pensions last year. In June I was in Ottawa with the National Union of Public and Government Employees to talk about strengthening pensions. I have already written about this in a previous column and will most likely write about it more in the future because it is a very important issue for our community. If seniors fall into poverty, everybody loses.
Both levels of government have made moves to weaken pensions. Federally, Harper raised the age at which individuals can collect Old Age Security (OAS). Provincially, Redford has attacked public pensions. Although I recognize the need to perhaps raise the pensionable age since people are living much longer, raising the pensionable age is much too simple. I could support raising the age if this were accompanied by an increase in OAS and if there were opportunities for those whose health is poor and cannot continue to work to be assessed and provided OAS earlier than those who are healthy and able to work longer. But none of that happened and the consequence is that the most vulnerable will not be eligible for earlier pension as they age. CPP does provide for disability pension but as it stands CPP is insufficient, particularly for low wage earners.
But what I really want to talk about again is reforming CPP and I want to encourage all of you to talk about this too. There was almost an agreement between the provinces and Ottawa to implement an increase. However, this was vetoed by the Alberta conservative government and so another voluntary unregulated scheme was introduced similar to the RRSP. RRSPs, by the way, are not used by low income earners. Thus, their usefulness is limited to helping the rich pay fewer taxes and the banks make profits on selling mutual funds. The majority of working Canadians do not belong to pension plans and do not have sufficient income to actually save for their retirement whether through an RRSP or on their own.
There was almost an agreement between the provinces and Ottawa to implement an increase. However, this was vetoed by the Alberta conservative government and so another voluntary unregulated scheme was introduced similar to the RRSP.
The solution to prevent people from going into poverty when they retire is to increase CPP and there are many good reasons why this should happen.
Reason One: Everyone who works (legally) pays into CPP. It is universal.
Reason Two: It doesn’t matter how many jobs a person has: in all of them there is CPP coverage. It is portable.
Reason Three: It is a guaranteed retirement income. Everyone knows how much they will get depending on their contributions. It is the best possible plan as it is a defined benefit.
Reason Four: There is some annual adjustment based on the consumer price index.
Reason Five: CPP is one of the most stable plans in the world. It has very low administrative costs and is secure and stable and will remain so for generations. It is well managed, providing a big pool of assets to support the economy.
Reason Six: CPP also provides disability, which means those unable to continue working can receive it whenever they need it.
Alison Redford says employers don’t like the idea of raising CPP because they would have to contribute more. But in the end, we all pay more when seniors and others in our communities live in poverty. Increasing CPP now is one easy way to assure our seniors don’t fall into poverty and this growing population has money to spend in our communities.
I would recommend you phone Alison Redford’s Office at (780) 427-2251 to let her know you support CPP reform, because she says most Albertans don’t.