Posted: Thursday, 3 September 2009

The global economy is in its deepest downturn since the 1930s. Many Canadians are fearful that they may retire without adequate pensions or even fall into poverty. Hundreds of thousands of good-paying jobs have been lost, and the pensions of millions of Canadians have been put at risk by the financial meltdown and a wave of employer bankruptcies. Even those with jobs are wondering if and when they can ever retire.

Without question, recent events have exposed major faults at the heart of our pension system. Our public pension system ― Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) plus the Canada Pension Plan ― provides a secure income in retirement, but the maximum value of public pensions falls well short of replacing the 50% to 70% of pre-retirement income needed to maintain decent living standards. Compared to many other advanced industrial countries, our public pension system is very underdeveloped.

The private part of our pension system, which was meant to make up the big difference between public pensions and adequate retirement incomes, is in deep trouble. Only about one in five workers in the private sector now belong to an employer pension plan. Very few non-union workers, with the exception of managers and professionals, are covered by an employer plan. Many of the plans which do exist are on shaky financial ground because of low interest rates and the recent collapse of stock markets. Some workers covered by pension plans find that there is no effective backstop when plans get into financial trouble.

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