Securing your retirement - or their profits?

June 14, Charlottetown Guardian

For many Canadians, working life will end with a sudden drop through our social safety net into an old age of crushing poverty. The majority have no workplace pension, and one in three Canadians will retire with no savings at all. Public pensions should be a life-saving cushion, but the maximum Canada Pension Plan (CPP) benefit is only $11,000.

This crisis in retirement security is what the federal, provincial and territorial finance ministers are discussing in Lakeside, P.E.I., today. They're meeting because millions of Canadians could be headed for serious trouble at age 65.

The Harper government has so far shown little appreciation of the seriousness of this crisis. After months of denial and dithering, federal Finance Minister Jim Flaherty now appears willing to support an NDP proposal to improve the CPP. But he's calling for timid improvements that just don't go far enough, although they would certainly protect the interests of financial industry players and lobbyists who benefit from hefty management fees on RRSPs.

Those without a workplace pension are being told by the "experts" that they'd better be putting aside 15 per cent of their income - or else. Feeding an RRSP is hard when you're struggling to make ends meet. It gets harder after watching your retirement investment lose a distressing portion of its value in this lingering financial crisis. Our pensions critic, Wayne Marston, heard that message loud, clear and often when he consulted with citizens across the country last year.

It all adds up to serious trouble. Millions could be forced to work well into their retirement years. Millions may never experience that precious time to reflect and enjoy life with family and friends.

It doesn't have to be this way.

One part of our pensions system has never failed us: Canada's public pensions. That's why New Democrats, alongside Canada's labour movement, are proposing two practical steps that build entirely on their rock-solid foundation.

First, let's help the quarter-of-a-million seniors who are living below the poverty line. We can do it tomorrow by injecting $700 million into the Guaranteed Income Supplement, which is part of Old Age Security (OAS). That's one-twentieth of what Mr. Harper's ongoing corporate tax cuts will cost us annually by 2012.

Second, let's build on that bulletproof Canada Pension Plan. Let's phase in a doubling of maximum benefits to $22,000 per year. That means increasing the CPP deduction that appears on your paycheque. Those deductions are savings, not taxes.

The arguments in favour of expanding the CPP are compelling. Wage earners would simply increase their contributions and employers would match those contributions. The CPP is the best savings vehicle available - the kind that lets you plan a future. It is a defined-benefit pension plan that's inflation-indexed and portable. Nearly all of us are members. Its national scale makes it recession-proof and keeps management costs low-around 0.25 per cent, versus three or four per cent for RRSPs.

Opposition to these ideas will come from the financial services industry because the RRSP business is a major profit centre for them. One estimate shows mutual fund fees taking as much as $25 billion a year out of Canadians' savings each year, a gravy train that financial-company lobbyists will work overtime to protect.

Canadians overwhelmingly backed the idea of improving the CPP when we proposed it in consultations. People just intuitively see that some challenges are best tackled together, to share risk and increase benefits.

That's why New Democrats helped create public pensions a generation ago. Our current proposal brings that vision into the 21st century and will ensure that those who are building this country don't spend their retirement years in line at the nearest food bank.