Speech: Layton announces plan to reform Canada’s pension systems

Yesterday I met with Nortel workers who are losing hope that they’ll ever see their full pensions or benefits.

And this summer our pensions critic, Wayne Marston, met Lewis Cook, who spent 40 years working at a pulp and paper company in Marathon. He retired in 1996 and was told recently that he’s losing many of his retirement benefits.

Imagine devoting your life to a company, paying into a pension plan for 40 years—only to discover more than a decade after your retirement that the money for your benefits has disappeared.

Pension plan underfunding means many more workers like Lewis Cook will never see the retirement income they’re counting on. And nowadays, fewer than 40 per cent of us even have workplace pensions.

The rest of us are relying on public pensions and private savings. Public pensions provide at most $16,000 to the typical retiree. Privately, only 31 per cent of Canadians contributed to an RRSP last year—and they’ve just seen billions in savings vaporize.

Today, 266,000 seniors subsist on a poverty-level income.

What we are facing is nothing short of a national crisis.

Today, I am putting forward four pragmatic proposals that can be deployed immediately to strengthen this country’s system of retirement security. And in the coming weeks we will make public additional elements of our comprehensive plan to help Canadians finance their retirement.

First, let’s eliminate seniors poverty—right now.

The mechanism is ready to go. We can put a price tag on it.

Statistics Canada figures the “poverty gap” among seniors at less than $700-million.

We propose increasing the Guaranteed Income Supplement to close the gap.

This is a $700-million solution to ensure dignity for the seniors who built this country.

Our policies need to reflect that priority.

Second, let’s strengthen the Canada Pension Plan/Quebec Pension Plan.

Fully 93% of Canadians are already members. No other option provides so many advantages at so little cost.

Specifically, we propose phasing in a doubling of CPP/QPP benefits, in consultation with the provinces.

This would increase the top monthly benefit from $908 to $1817, helping to secure a liveable retirement for Canadians.

Doubling benefits will require an additional payroll deduction near 2.5%. That’s less than the administration fees alone on many RRSPs.

Third, it’s time for a national system of workplace pension insurance.

Underfunded pensions are an epidemic calling for a range of solutions. 

Though our Workers First initiative in Parliament, we have secured some protection for unpaid wages when employers go bankrupt. We are still fighting to move workers’ underfunded pensions to the front of the creditor line—ahead of the banks.

At the same time, workers need insurance guaranteeing a minimum pension income when their workplace plans fail.

We propose a self-financing, mandatory insurance system funded by the plan sponsors.

This is standard in the United States. In Canada, only Ontario has an insurance plan.
We are proposing a national plan ensuring pension payouts up to $2,500 per month.

Finally, let’s create a public facility that can “adopt” orphaned pension plans.

In bankruptcies, workplace pension plans may be wound up and converted to low-interest annuities. But often, pensioners would be better served if their pension plans could live on as “going concerns.”

New Democrats propose creating a facility to adopt pension plans orphaned in employer bankruptcies.

This facility would be managed by the CPP Investment Board. It would be empowered to adopt pension plans of both federally and provincially regulated companies — subject to an agreement with the provinces.  

In closing, let me just say that New Democrats are part of a rising chorus of voices calling for national leadership on this national retirement income crisis.

Seniors’ advocates such as CARP are calling for urgent action. The Canadian Labour Congress has made this a top priority. Provincial Premiers have expressed a willingness to be part of a solution.

The next step for Mr. Harper is to look up and see that he has willing partners ready to roll up their sleeves and get to work. He should start by calling a national summit to carve out a path forward.

We’re ready to work. What about Mr. Harper?