IN THE SPOTLIGHT: Retirement roulette

The reality is that 12 million Canadians lack a workplace pension plan. Only one in four Canadians can afford to purchase RRSPs each year.

I hear from constituents on a regular basis who are concerned about their retirement future.

The reality is that 12 million Canadians lack a workplace pension plan. Only one in four Canadians can afford to purchase RRSPs each year. One quarter of a million seniors live in poverty in Canada. One in four workers is in a low wage job that pays $13.32 an hour or less.

Basically, many people don’t have enough income left after their monthly expenses to save much, if anything, toward their retirement. This is a looming problem in Canada.  With the real costs of basic living rising faster than Canada Pension Plan (CPP) rates, it becomes a crisis.

The federal Conservative government’s approach to retirement security is to ask many families to face the crisis alone. This was illustrated in November when the government announced a Pooled Registered Pension Plan (PRPP), a type of group RRSP that employers may now offer.

Instead of defined-benefit workplace pensions or meaningful changes to the Canada Pension Plan, the federal government has given you the choice to pump even more of your savings into risky private funds and stock markets.

To me, this plan seems to serve the banks and brokers, not the citizens.  You’ve probably watched your or other people’s RRSP savings tumble in the past few years, with additional costs of fees paid to fund managers. In 2007 alone, RRSP holders lost a whopping $25 billion to management fees.

The Conservatives have also announced a recent change to CPP eligibility, “allowing” people to work longer and still contribute to CPP past the age of 65, while increasing the penalty for retiring before 65.

This may be good news to some people – those who wish to continue to work and both draw on and contribute to CPP – but many Canadians work at jobs that are very demanding to their health.  Maintaining full employment to the age of 65 is already a challenge for some.

Constituents are telling me they want less risk in their retirement planning and savings, not more.

In the mid-1960s, the New Democrats helped launch the Canada Pension Plan.  Public pension plans work. The large scale and professional management of the CPP helps keep costs down and accrues benefits for citizens.

Most provinces are also now calling for an expanded CPP with most provincial leaders agreeing: increasing the CPP benefits is the best, lowest-cost pension reform option available. Yet in December 2010, at a meeting of provincial finance ministers, Ottawa rejected this idea.

The Federal NDP wants to ensure that Canadians can retire with dignity.

The Canadian Labour Congress agrees, stating, “The Canada Pension Plan delivers a defined benefit, fully indexed to inflation, and operates at much lower cost than the proposed ‘pooled registered pension plans’ which will generate large fees for the financial sector, and produce a variable and uncertain return.”

The federal NDP’s plan would:

  • expand the guaranteed Canada Pension Plan by phasing in, over a seven-year period, an affordable doubling of benefits from 25 per cent to 50 per cent of a retiree’s pensionable earnings,
  • gradually increase the Guaranteed Income Supplement as well as ensure automatic enrolment,
  • invest in home care as part of the public health care system and
  • invest in long-term care for the elderly.

The global economy is headed for rough waters and Canada is not immune. Now is the time for practical, stable solutions that will protect our families for years to come.

Alex Atamanenko is the MP for B.C. Southern Interior