Op-Eds
The bankruptcy of Sears Canada, and the threat that its underfunded pension plan won't pay what it promised, has caught the attention of members of Parliament. Understandably so. People don't get a second chance at retirement. Getting an annuity less than you counted on is a terrible blow.
After the sponsor of an insolvent pension plan has gone bankrupt, moreover, governments have no happy choices. A bailout – taxpayers paying for the actions of an irresponsible employer – would be unfair, and set a terrible precedent. Some want a national pension guarantee fund that would charge premiums and pay out upon failures. But experience in the United States, Ontario and elsewhere shows that those schemes also tax responsible people to…
Low fertility rates, increasing life expectancies and the aging of baby boomers are causing Canada’s old-age dependency ratio to rise. This increase in pensioners relative to the working-age population will strain the sustainability of our social security system. Should the age of eligibility (AOE) for seniors’ programs be raised? If so, when? Since Ottawa seems to be avoiding the problem, we propose a politics-free solution.
We propose that Ottawa adopt an automatic balancing mechanism that would automatically adjust the AOE for programs like Old Age Security (OAS) and Canada Pension Plan (CPP) based on demographic calculations outside of political influences. The formula would deem that a constant proportion of one’s adult life…
We have often heard that Canadians are unprepared for retirement. Low interest rates have meant low returns to saving and have accelerated the demise of defined-benefit pension plans in the private sector. People — we are told — are not saving enough for retirement to compensate. But such fears of retirement unpreparedness are overblown.
Studies on the subject have typically ignored retirement savings beyond the three traditional retirement pillars of: 1) Old-Age Security (OAS and the Guaranteed Income Supplement); 2) CPP and the Quebec Pension Plan; and 3) workplace pensions and RRSPs. Specifically, gloomier reports have neglected wealth accumulated in the fourth pillar of retirement, made up of non-pension assets. As Fred…
Earlier this week, The Globe and Mail revealed internal research by government officials showing a global trend toward older normal pension ages, with most OECD countries’ target policy retirement age to be raised to at least 67 by around 2050. An eventual increase in the normal retirement age, here in Canada, appears inevitable.
Despite this trend, Ottawa recently reversed course and cancelled a scheduled gradual increase in the Old Age Security (OAS) eligibility age from 65 to 67, to be fully implemented by 2030. The recent decision fails to recognize longer life expectancy since the 65-year-old benchmark was adopted, and the current marked trend towards later retirements. Projections show that by 2030, about 40 per…
Has anyone ever looked at their paycheque and said, “I sure wish they’d take more of my money”?
That was the question posed by federal Opposition Leader Rona Ambrose Monday as federal and provincial finance ministers met in Vancouver to discuss proposals to expand the Canada Pension Plan. In the end, they agreed on a sizable expansion of the CPP. Is this what Canadians really want?
I honestly think the answer is yes – at least for the most part.
The main target for a CPP expansion has been a group of middle-income individuals who don’t have workplace pensions. The public pension system will be central to financing their retirement. We know many of them simply fail to save.
CPP offers a commitment device,…
