Time to think pensions

Lana
Lana Payne
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Wall Street is at it again. Mahatma Gandhi once said that "the world holds enough to satisfy everyone's need, but not everyone's greed." He could have been speaking of today's global banking and financial sector.

It was reported last week that Wall Street employees raked in a whopping $20 billion in bonuses in 2009.

This, while millions of Americans remain unemployed, have lost their homes, and are suffering through the worst recession in 80 years and all because of Wall Street's greed.

Wall Street is at it again. Mahatma Gandhi once said that "the world holds enough to satisfy everyone's need, but not everyone's greed." He could have been speaking of today's global banking and financial sector.

It was reported last week that Wall Street employees raked in a whopping $20 billion in bonuses in 2009.

This, while millions of Americans remain unemployed, have lost their homes, and are suffering through the worst recession in 80 years and all because of Wall Street's greed.

These bonuses were also paid out in the face of hundred-billion-dollar taxpayer-funded bailouts for the financial sector.

As one U.S. lawmaker noted, this is a "bitter pill" for jobless Americans to swallow.

That's an understatement if there ever was one.

No concern

Wall Street doesn't give two hoots. Their actions have caused far-reaching hardship and pain.

But they are oblivious, brimming over with entitlement and arrogance.

But greed is not just a Wall Street staple. Canada's Bay Street is littered in bonus pay too.

A study of the top paid CEOs in Canada by the Canadian Centre of Policy Alternatives pegged the average CEO compensation in 2008 - a year when over 250,000 Canadians lost their jobs - at $7.3 million.

That's about 174 times greater than the average income of Canadians. Not Wall Street heights, but still pretty stratospheric.

Like most recessions, this one has widened the income gap between those with the most and the rest. This is, in large part, because working people have been forced to pay the recession price.

There is little appetite in Canada to deal with these blatant inequalities. Instead, the Canadian government would rather make working people pay.

Targeting federal pensions

And that's exactly what Treasury Board Stockwell Day has in mind. He figures federal civil servants are an easy target. And he will use the fact that some 60 per cent of Canadians have no workplace pension plan against those who do.

He will try to convince Canadians that these federal workers must share the pain even though cutting their pensions will do little to help pay off the deficit - a deficit that is in large part due to the massive tax cuts made by the Harper government.

The real answer is to fix Canada's pension system by enhancing the Canada Pension Plan (CPP), Old Age Security and the Guaranteed Income Supplement so everyone has some level of security in retirement. The answer is not to roll back pensions for those who have one.

Self-serving ground

In this, the Harperites stand on some pretty shaky and hypocritical ground. A recent national newspaper article pointed this out just days after Mr. Day told the public sector unions that there must be "considerable sacrifices."

The article noted that nearly all the former Reform MPs, who ridiculed MP pensions when first elected, are eligible for pensions of more than $100,000 annually when they reach age 55, including Prime Minister Stephen Harper.

In fact, the prime minister, according to calculations from the Canadian Taxpayers Federation, will collect an annual pension of $150,000.

In comparison, the average CPP payout (based on 25 per cent of pre-retirement earnings up to a cap of $46,000) is about $6,000 annually.

The maximum a person can collect is about $11,200 annually from CPP.

Personally, I don't begrudge these MPs their pensions upon retirement. I just want all Canadians to have an opportunity to have a decent pension.

Unfortunately, too many Conservative MPs do not see that what is good for them is also good for all Canadians. These MPs will retire with a better-than-decent defined benefit pension.

An enhanced CPP plan would ensure the vast majority of Canadians could have a decent retirement. But so far, the Conservatives have been opposed to this idea.

Creating an adequate public pension system is decried by those very MPs who have gold-plated pensions. They denounce such as system as "a nanny state."

Blood from a turnip

The reality is Canadians are not voluntarily saving enough for their retirement.

And this reality is getting worse, not better.

And let's face it, there is an irony here too because if people actually did stash away more and more money into the RRSP lottery, they'd have less money to spend, and policymakers, despite what they say, need Canadians to spend. Consumer spending is a big factor contributing to our nation's economic growth.

Finance ministers are currently looking at pension options.

Unfortunately, often what is best for Canadians is not what gets considered.

No doubt there is a considerable lobby from the banking and financial sector not to go the CPP route as it may impact the RRSP market.

No doubt there are plenty of politicians open to this kind of pressure as it fits nicely with their own ideology - people should fend for themselves. (That would be everyone but the politicians.)

Some are floating the notion of tinkering with the RRSP model or creating a supplementary plan to CPP that would be voluntary.

These proposals are being wrapped up in the argument of choice and flexibility, but what they really represent is status quo.

The reality is that millions of Canadians do not have money to tuck away.

They are living from paycheque to paycheque with a little help from the credit card. This is the real world. Perhaps it's time public policy reflected it.

And perhaps when we can voluntarily grow old, we can think about a voluntary retirement savings option for Canadians.

Lana Payne is president of the Newfoundland and Labrador Federation of Labour. She can be reached by e-mail at lanapayne@nl.rogers.com. Her column returns March 13.

Organizations: Canadian Centre of Policy Alternatives, Conservatives, Newfoundland and Labrador Federation of Labour

Geographic location: Canada, U.S., Bay Street RRSP

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Recent comments

  • Frank
    July 02, 2010 - 13:31

    This is very interesting when you discover that so many senior citizens who have retired are living below the poverty line. The federal liberals will agree to this, but they are only concerned with the upfront , young voters who seldom vote.
    There seems to be that feeling of putting seniors on the back burners , forgetting that they were the work horses who built this great country.

    On election day politicians offer senior's the service of kings and queens. The next day they are forgotten and given a deaf ear. Who really wants to hear about the below the poverty line conditions, not your politicians?

  • mark
    July 02, 2010 - 13:21

    How about cutting back on the federal contribution to fed civil servant pension plans while extending the minimum retirement age to 60 or above? The fed gov could then contribute the savings to the CPP so that all Canadians will see increased payout after 65.
    This way the civ servant gets a boost in his/her CPP to make up for a portion of their decreased pension benefit, and the rest of the country who are not fortunate enough to land a fed gov job get an increased CPP to help stabilize their retirement.
    Remember, it is the taxes of the non gov workers and the gov revenues realized from the products/services they deliver that pay for the fed gov worker's pension and their CPP.
    Once again Lana you have missed the mark in your effort to promote the union movement at the expense of all others.

  • rollie
    July 02, 2010 - 13:09

    Public pensions should not be reduced, but improved. Employees paid for their pensions over 30/ 35 years and to have the PC's even hint that pensions would be looked at is not the right approach. Also, the CPP intergration with the public pension applied at age 65 should be discontuined now! The only way government will lisen is to continue the fight, and for Lana to keep this issue alive with her message.

  • Frank
    July 01, 2010 - 20:19

    This is very interesting when you discover that so many senior citizens who have retired are living below the poverty line. The federal liberals will agree to this, but they are only concerned with the upfront , young voters who seldom vote.
    There seems to be that feeling of putting seniors on the back burners , forgetting that they were the work horses who built this great country.

    On election day politicians offer senior's the service of kings and queens. The next day they are forgotten and given a deaf ear. Who really wants to hear about the below the poverty line conditions, not your politicians?

  • mark
    July 01, 2010 - 20:05

    How about cutting back on the federal contribution to fed civil servant pension plans while extending the minimum retirement age to 60 or above? The fed gov could then contribute the savings to the CPP so that all Canadians will see increased payout after 65.
    This way the civ servant gets a boost in his/her CPP to make up for a portion of their decreased pension benefit, and the rest of the country who are not fortunate enough to land a fed gov job get an increased CPP to help stabilize their retirement.
    Remember, it is the taxes of the non gov workers and the gov revenues realized from the products/services they deliver that pay for the fed gov worker's pension and their CPP.
    Once again Lana you have missed the mark in your effort to promote the union movement at the expense of all others.

  • rollie
    July 01, 2010 - 19:44

    Public pensions should not be reduced, but improved. Employees paid for their pensions over 30/ 35 years and to have the PC's even hint that pensions would be looked at is not the right approach. Also, the CPP intergration with the public pension applied at age 65 should be discontuined now! The only way government will lisen is to continue the fight, and for Lana to keep this issue alive with her message.