Posted: Wednesday, 24 March 2010

As published in the Montreal Gazette, Wednesday, March 24, 2010

I have been invited by the federal Liberal Party to participate on a pension panel on March 27 during a policy conference in Montreal. I find it reassuring that the party recognizes we have a pension problem in Canada and is looking for ideas about how to solve it.

Most Canadians are not saving enough to live comfortably in retirement. The recent financial and economic crisis has shone the light on existing weaknesses in our patchwork system of public and private pensions. One-third of Canadian workers aged 24-64 have no personal retirement savings at all, and 61.5% of workers (11 million people) have no workplace pension. The situation is serious, but fortunately, there are solutions at hand if we as individuals and a society, are prepared to do the right thing.

We in the labour movement believe that an enhanced CPP should form the cornerstone of pension reform and retirement security. Almost every working Canadian is already covered by the Canada Pension Plan. The CPP is the easiest, most cost-effective savings vehicle for retirement. It is financed entirely by premiums paid by workers and their employers. Each of us has a CPP account and we can easily find out how much the plan will pay out when we retire.

The CPP covers 93% of working Canadians and it is portable no matter where we work or how often we change jobs. It is financially solid and its investment decisions are made by an independent board. The CPP’s fees are the lowest pension administration fees in the country – lower than private pension plans and much lower than those on RRSPs offered by the financial services industry. Even bankers are now admitting that RRSPs, with their high administrative fees and risky investments, are not the answer to our pension needs. The CPP will be there for us when we retire and for our children when they retire many years from now.

The problem is that when the plan was introduced in the 1960s, it was designed to replace only about one-quarter of a worker’s wages in retirement. The current average wage is approximately $41,000, and the maximum CPP benefit is about $11,500. We want to see a doubling of future CPP benefits over time. This would be financed by a modest increase in the CPP premiums paid by workers and employers. It is young workers who will benefit the most, but middle-aged and older workers will benefit as well. An enhanced CPP, along with existing Old Age Security benefits and an improved Guaranteed Income Supplement for lower income seniors will significantly improve incomes for people in retirement.

The CLC and its affiliated unions have been calling for a national pension summit to develop real solutions. The federal, provincial and territorial finance ministers met behind closed doors in December 2009 to talk about pension reform. Ottawa promised pension consultations at the time, but then the government shut down parliament and those consultations were postponed. This makes the Liberal Party’s Montreal policy conference and its attention to the pension issue all the more important. We believe our proposal for an enhanced CPP is the best way to proceed, but we welcome a healthy debate on the pension issue.

Last fall, the CLC and its affiliated unions launched a retirement security campaign that focuses on pension reform. We have met with finance ministers and premiers. We have organized or participated in dozens of meetings with labour, pensioner and community groups. Union members have lobbied more than 100 MPs and a long list of provincial MPPs and MLAs. We believe that our campaign has placed pensions on the public agenda. The challenge now is to make sure that the voices of ordinary Canadians are really heard by decision makers.

Each of us has a responsibility to save enough to live with dignity in retirement. We can best fulfill that responsibility to ourselves and our families by supporting improvements to the CPP. This is an important moment in Canadian history, much like the debate on health care in the 1960s. Canadians can either be forced to go it alone in planning for retirement security using the high-fee products served up by the RRSP industry, or we can enjoy the benefits of an enhanced system of public pensions based on the CPP.

Ken Georgetti is president of the 3.2 million member Canadian Labour Congress.