Improve pensions and the sky won't fall

Lana
Lana Payne
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Once again the sky is falling in. Oh and they really, really, really mean it this time.

To listen to the Canadian Federation of Independent Business (CFIB) tell it, you'd think the economy was about to implode, not because of anything Wall Street or Bay Street has done, but because last week the majority of the provinces and the federal government agreed to enhance Canada's public pension system.

In a perfect example of acting in self-interest rather than the public interest, the CFIB came out swinging against the pact reached by the finance ministers in Prince Edward Island.

The ministers agreed to a modest increase in the Canada Pension Plan - the safest and most secure pension plan in the country. Details, such as how much of an increase to benefits and the replacement rate, will now be worked out by officials.

The nation's labour movement had been campaigning for CPP to be enhanced through a modest increase in premiums to be phased in over seven years.

While the increase in premiums under labour's plan would be more than reasonable, the benefits for working people would be great - a doubling of benefits or the replacement rate from 25 per cent of pre-retirement earnings to 50 per cent.

The CFIB, according to their CEO, finds such a solution disgusting. Catherine Swift would rather we continue on as we have been, anything so her members will not have to contribute more to the retirement of their employees.

But the CFIB has failed to recognize that the status quo is not working and the pension crisis is going to hurt many small businesses.

Most Canadians are just not saving enough to live comfortably in retirement. One-third of working Canadians between ages 24 and 64 have no personal savings at all and nearly 62 per cent of workers or about 11 million have no workplace pension plan. Some 1.6 million seniors are living in poverty in Canada.

Many seniors are struggling to get by. In our own province, 60 per cent of seniors receiving Old Aged Security also receive the Guaranteed Income Supplement, which means they are earning just $11,000 or so a year.

These numbers tell us that status quo is not an option.

The Canadian Federation of Independent Business has failed to put forward any real solutions to Canada's pension crisis. Their solution is more tax cuts - their solution to every problem.

Once again, the CFIB pulled out the job-killer argument, saying modest increases in CPP will kill jobs. They always say that. The sky is always going to fall in and yet somehow it never does.

In her vitriolic opposition to the proposals to enhance CPP so all working Canadians benefit and have an opportunity for a decent and secure retirement, Ms. Swift continued to attack the pensions of public sector or government employees. Attacking those who actually have some sort of retirement security does little except highlight the CFIB's mean-spirited side.

The answer to Canada's pension crisis is not to take away from those who have, but to ensure those who have little have an opportunity to actually have a decent retirement.

It's doubtful, the small businesses she says she represents would be happy if all those public sector workers and retirees decided not to patronize those shops and small businesses with CFIB stickers on their doors. I can assure Ms. Swift that in many communities in our province, seniors and public sector workers are an important source of business for her members.

In fact while she says a "survey" of her members shows they oppose enhancing CPP, a scientific poll, conducted by Vector Polling for the Ontario Federation of Labour, of Ontario small businesses had different results.

According to that poll, nearly two-thirds of small business owners, when asked, believe that a public pension system like the CPP would improve competitiveness as it levels the playing field. In addition, it would be a low-cost, red-tape-free solution compared to the costly, burdensome and time-consuming process to administer small-scale private plans.

In addition, the poll showed that small businesses understand the importance of retirees and seniors having money to spend and just how much business this represents and will represent for her members as more and more Canadians enter retirement.

Enhancing CPP so the replacement rate is doubled will mean an increase in premiums. Workers will have to pay more and so will their employers. But the cost is small - 2.75 per cent each, spread out over a seven-year period, according to labour's proposal.

What that means is each year for seven years, workers and their employers will contribute an additional $13.29 a month, or 11 cents an hour (for someone earning $41,000 a year, the average annual income) based on a 40-hour work week.

I suspect plenty of small business owners want and do pay decent wages. Many of them are concerned with big issues like recruitment and retention and how they are going to compete for workers in an era of labour shortages. They would like to offer low-cost, red-tape free benefits for their employees. They don't want the hard-earned wages of their employees to be eaten up in obscene RRSP management fees.

Many small businesses are not the mean-spirited, anti-worker, anti-everything employers that Ms. Swift would have us believe.

Perhaps it's time small businesses started speaking out again this kind of drivel so they are not tainted by the negativity coming out of Catherine Swift's mouth.

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 July 3.

Organizations: Canadian Federation of Independent Business, Ontario Federation of Labour, Newfoundland and Labrador Federation of Labour

Geographic location: Canada, Bay Street, Prince Edward Island Ontario

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Recent comments

  • Dwayne
    July 02, 2010 - 13:33

    Ms. Payne has articulated her perspective very well; a viewpoint I strongly agree with. To do nothing is assurance of the ineffectiveness of the CPP on a go-forward basis. The time is now to increase the premiums for the sake of those who need it and the integrity of the CPP; A program that is the envy of other countries. This Country was built on care for all not enormous profit for a few. A caring society is a prosperous society.

  • mike
    July 02, 2010 - 13:23

    The pe ple most in need of financial assiatance,those seniors receiving the supplement will not benefit from an increase in the Canada pension,because those officials who are still wearing the rose colored glasses will make sure that they take the increase off their supplement,you cant win for losing.

  • Dwayne
    July 01, 2010 - 20:21

    Ms. Payne has articulated her perspective very well; a viewpoint I strongly agree with. To do nothing is assurance of the ineffectiveness of the CPP on a go-forward basis. The time is now to increase the premiums for the sake of those who need it and the integrity of the CPP; A program that is the envy of other countries. This Country was built on care for all not enormous profit for a few. A caring society is a prosperous society.

  • mike
    July 01, 2010 - 20:08

    The pe ple most in need of financial assiatance,those seniors receiving the supplement will not benefit from an increase in the Canada pension,because those officials who are still wearing the rose colored glasses will make sure that they take the increase off their supplement,you cant win for losing.