Sunday, February 5, 2012 | Categories: Episodes
On Cross Country Checkup: pensions
As aging boomers crowd towards retirement, others worry about the security of old age pensions.
With four workers now for each senior ...in 20 years it'll be 2:1.
Is it time to tweak Canada's pension system?
With host Rex Murphy.
The Conservative talking points call it "entitlements" deliberately to imply there's a certain sense of entitlement. They're not. They're benefits of an insurance scheme, paid into by the participant and matched by the government. There's nothing entitled about it. And, considering that MP's have outstanding pension plans, which the former reform members voted for once elected, it seems terribly aristocratic to want to force little old ladies to eat cat-food. Greece doesn't have a decent income tax scheme.
The Conservative economic plan is a dismal failure now, and they know it. Predicting a loss of 50 per cent of working Canadians should shock everyone to the bone and the issue over pensions will be the happiest of issues at that point. This is a catastrophe being dressed up a right vs. left issue. Perhaps tax cuts, GST cuts and other cuts, which of course reduce government revenues, would have a negative impact on the ability of government to keep up? Duh!
Duncan, British Columbia
The Prime Minister's intention to reform pensions is a copy of many other right-wing governments. In the Canadian context, why does the Prime Minister think he can use pension money to pay for prisons the majority of Canadians do not want, or replace jet fighters that are still state of the art and reliable, versus brand new, expensive and untried new models? I think the Prime Minister is mindlessly following some agenda put out by some right-wing USA think tank. I hope the Prime Minister will put the issue of pension reform, building new prisons and buying fighter planes to a referendum.
Enjoy your show,
Vancouver, British Columbia
The Globe and Mail reported last week that a recent study concluded the pension system was both in good shape and sustainable in its present form. No need to change age requirements. This was not an unsolicited opinion from a think tank or citizen's group. Rather, the study was commissioned by the government. The Conservative government has told us, on more than one occasion, that they don't set policy based on statistics. The 2011 census is soon to be released, this week I believe. Any bets on the government using statitsics from this to justify their proposed changes?
Vancouver, British Columbia
Mr. Harper wanted to stir the pot and see the reaction and he got one. Everyone is talking especially those of us close to the issue. I am 62 years old and do not mind one bit working an extra two years. I am not sure what the outcry actually is about. What's an extra two years? Especially if we are in good health. Although, I have been under the impression that the young ones can't get jobs because of us baby boomers. Now they want to keep us in longer. Go figure. Anyway, I have no objection.
Kelowna, British Columbia
Thank you for giving this subject some public airing, Rex. I am 81 years old and retired, but I wager that I am paying more taxes than the two workers toiling at the McJobs which our race-to-the bottom capitalist economy keeps creating in ever-increasing numbers. I resent the implication that retired people do not pay taxes contained in the mantra that there will be only two "working" Canadians to support me. They are not able to support me now, nor will they be in future. On the other hand, I can visualize our present economic system producing more elderly indigents down the road.
Love your show,
St. Albert, Alberta
Any delay to the age eligibility for CPP and OAS will result in dramatic increases on every province's disability programs. The people receiving those benefits will stay on provincial benefits longer and a larger pool of people who become disabled in later life will end up on provincial programs. If federal benefits are delayed without coordinated provincial responses it will amount to massive downloading on the provinces.
I have not heard enough discussion or information about the clawback. My understanding is that the OAS isn't clawed back until a senior earns $68,000 per year and isn't clawed back fully until the income is over $109,000 per year. I think we need to look into these numbers and question these particular levels. It really seems to me they need to be lowered, perhaps drastically. It seems to me that if the level of the clawback were lowered, many millions of dollars would be saved that could then continue to go into the pockets of our many low-income seniors who actually are in real need. Also, it is really a fantasy to be telling people, in light of proposed changes to the OAS, to plan to put more money away. Many Canadians live below or near the poverty level and simply cannot put more money away.
Courtenay, British Columbia
As far as I am concerned these measures are needed. Canadians shouldn't be taking advantage of our social programs. Whether it be healthcare or education or social assistance, if you are capable of working past 65, you should continue working. In my opinion the age should be pushed up to 75. I myself am only 17, but it is disheartening to me to see that perfectly capable Canadians retiring just because our government is generous enough to often benefits. We all pay taxes, as I grow older I don't want my whole salary going towards able bodied people taking OAS benefits. If my generation and the generation before me, have to pay for baby boomers, we will be working into our 80s, and probably until our deaths. Let's make it fair for all Canadians, past, present and future.
While you and your guests wonder why there could be anything wrong with aging boomers working indefinitely, I must remind you that job opportunities for young people are at an all time low and if boomers who don't need to work would get out of the way and allow young folks to have the opportunities the boomers have benefited from, that would be a good thing.
As far as this reasonable man is concerned, it comes down to one basic question: How much am I going to have every month after the government is finished dicking around? What percentage of my pension will a case of beer cost? Never mind the financial or political philosophy, or the rantings of the opposition and the doom-and-gloom predictors. They all don't matter. It's how much do they want this time? Will I and all around me be better off this month than I was last year at this time?: The government givith and of course the government taketh away.
Jim van Horn
Kaslo, British Columbia
The baby boomers are a demographic bump, not a recurring cycle. The ratio of workers to retirees will improve after a few years. Also, I think we will need to see a lot more immigration in the next couple of decades, not just to fund the pension, but to do the work. And keep in mind that those immigrant families and, happily, our First Nations are having lots of kids. I don't think the future is as scary as some would have us believe.
And if there is to be a rise in the age of retirement, I really think there should be some kind of exception made for hard physical work like fishing, logging, mining and nursing.
Happy Adventure, Newfoundland
I can see extending the age of retirement to age 68, if not 70, given the success of Health Care and given the commitment of Canada's governments to maintain a robust health care system that will increase in value and decrease in cost if the focus is changed from interference medicine to naturopathic and preventive medicines.
However, if the CPP is to be reformed it can not be expected that Canadians be victimized by RRSPs and their ties to the stock market. CPP is a sane form of acceptance of the government for the safety and welfare of its people. The slow destruction of the CPP from the mid-70s on has not worked to date and it is so like a neo-conservative to flog a dead horse to expect it to win a race.
Also, it benefits no tax payer to have a pensioner pay taxes on their pension. That practice should be stopped. I would consider that progressive reform.
Ladysmith, British Columbia
I am 32 years old and I support a strong Canadian pension system and old age security. I don't see how reducing the eligibility and reducing the benefits makes for a stronger system. We have seen corporate tax cuts and increases in EI and CPP contributions. I encourage a debate over our baby boomer problem, but that isn't what is happening in our government. We have been told by Harper that we will see a transparent government, but he has kept Canadians out of this debate over our future and told us to eat crow. Also, the statistics on people who work past age 65 shows they die sooner then those who retire earlier, so I guess Harper really will save us a lot of money.
Love the show,
Yellowknife, Northwest Territories
If there are changes to be made to OAS for the seniors of tomorrow, then so be it. However, let's hope there will be changes to the pension plan system of the MPs as well. After all, there aren't many jobs out there offering a pension after only seven years of service. Also, why aren't their pensions clawed back at retirement time, like the rest of us? They've got the good life, good pension plan with no clawback, long summer vacations and six weeks off at Christmas. What an idyllic life!
Some of your callers have suggested that OAP be for those who need it. It makes me remember when a universal health insurance scheme was being debated back in the 1950s and '60s. Progressive Conservative leader/Prime Minister John D. Diefenbacher called the means test "The meanest test of all."
I'm in my early 60s and would be happy to work into my old age, provided that young people have first kick at the jobs available. I would also need to see Stephen Harper give up his golden parachute into early retirement courtesy of Canadian taxpayers. He's the last person who should be saying we can't afford the OAS.
Cumberland, British Columbia
Right Wing Murphy jumps with both feet on the woman making some good points. There are fewer and fewer good jobs available, hence fewer opportunities for the average person to save for retirement. In ten years people retiring are going to face a very miserable future. This is not the time to be cutting pensions. As for how to pay for it, how about taxing rich companies like Caterpilar who thank Canadians for Harper's generous tax cuts by applying the proceeds to shutting down their factories and leaving the country.
I wonder if anybody has ever considered creating a connection between our deductions for the EI and CPP funds? Many of us have never used the EI collection made to our names (or used once, or used only for a very short time). I understand the collective nature of this fund, but maybe there should be a discussion on transferring of the unused EI funds to the CPP fund collected for each individual worker? Obviously, Service Canada is capable of calculating how much and for how long one can count on the collected EI in case of remaining unemployed, it shouldn't be too complicated to apply such individual calculation to the retirees whose EI savings should/could/might be transferred to their CPP and/or old age plan. Has anybody considered adding such point to the discussion on the pensions reform? Just a thought.
Thank you for the great program. I'm always extremely impressed with Mr. Murphy's courtesy and patience with some more challenging callers.
I am not against some form of pension reform, but I am somewhat angered by this idea of a means test or wealth test. It penalizes the fiscally responsible. I am 41, have a good job and have been paying income tax since my graduation from university. Since then, I have been saving dilligently and living within my means. I will have contributed to government coffers for 45 years by the time I should be eligible for CPP and the OAS etc. Why should I be cut off if I have been paying into this for years and have acted responsibly? I have as much right to these benefits as all my counterparts that are buying expensive toys on credit. Why should they benefit from their fiscal imprudence and I be penalized for doing the right thing? Why should I continue saving - savings that are actually investments into Canadian businesses? If the social contract is to be re-negotiated let it be an election issue.
Sackville, New Brunswick
I am not against some form of pension reform, but I am angered by this idea of a means test that penalizes the fiscally responsible. I am 41, have a good job and have been paying income tax since my graduation from university. Since then, I have been saving dilligently and living within my means. I will have contributed to government coffers for 45 years by the time I should be eligible for CPP and the OAS etc. Why should I be cut off if I have been paying into this for years and have acted responsibly? I have as much right to these benefits as all my counterparts that are buying expensive toys on credit. Why should they benefit from their fiscal imprudence and I be penalized for doing the right thing? If the social contract is to be re-negotiated let it be an election issue.
Sackville, New Brunswick
In order to even start reforming OAS/GIS, there needs to be a change in eligibility requirements. For instance, those who hide their assets in family trusts and other means of diversion need to be weeded out. Transfers of property into childrens' names to hide assets need both taxation changes and eligibility changes. Off-shore investments need to be taxed under Canadian law, not the law of the off-shore country, requiring international agreements. These issues really need to be addressed before reform of basic pension plans can be fairly instituted.
North Vancouver, British Columbia
I want to know how many people are colllecting a pension or colllecting services that have not worked a day in canada. I hear it all the time and it makes me sick. Thanks for the great show. I look foward to waking to you.
New Westminster, British Columbia
Rex, the Canada Pension Plan and public service plans are matters which Canadians should discuss and understand. In my case I am a scientist employed by the federal government. To my chagrin, very few Canadians are aware that provincial and federal government scientists are payed significantly less than their counterparts in industry. We civil servant scientists view our pensions as deferred income. I am therefore concerned that this deferred salary might be under threat.
Love your show,
Medicine Hat, Alberta
While reform may be needed, we need to look at the bigger picture. Who is going to replace the retirees in the work force? We need to increase immigration threefold from the present numbers. Also, those workers that have no pensions through work need some sort of supplemental program to ensure they can survive through their golden years. Industry (oil and gas) is claiming they can't hire enough people. Go west, my eastern friends. Go west.
Fort McMurray, Alberta
You and others have advocated schemes to deal with the demographic imbalance that will come into existence when the boomers are in retirement mode. These include doubling the CPP, incentives for workers to save more during their working life. Let's imagine all the schemes work and that everyone's retirement needs are well funded (even if that is dreaming in technicolor). Would it not be so that looking at it from a macro-economic viewpoint, there will still be a burden on the future working population when the retired population goes from 20 per cent of workers to 40 per cent? This is because the working population would have to service all the investments (stocks and bonds) that make up all the retirement funding that is in place. So either way it seems that raising the retirement age is the only solution as it will hold the ratio down to a degree.
Port Hope, Ontario
I find it unfortunate that so many of your callers say that the other guy, for one reason or another, should not get an OAS pension but they should. It is a modest pension system from both a cost and individual benefit perspectives. It feels like we the 99 per cent are fighting over the scraps. If we cannot afford this plan, how can we afford our public health care system? The one per cent pays less tax and the corporate sector continues to contribute significantly less to our country. We the people are paying the freight. Can't we expect something for that?
Halifax, Nova Scotia
Mr. Murphy, the bias in today's broadcast was appalling. You joke with and cajole callers with whom you agree while arguing and dismissing those with whom you disagree. With one man you managed to anger and frustrate him by avoiding commentary on the substance of his comments, and when he became predictably annoyed you were justified in cutting him off, disposing valid points to the electronic trash can. The man did have valid points that you totally failed to recognize. Soon thereafter you disposed of a woman that wanted to point out equally valid issues by focusing on a supposed slight to your guest, a man who is hardly unbiased himself.
We know there is a growing disparity between the rich and poor, we know that multinational corporations are realizing record profits despite the so called recession, and we have given up high paid industrial jobs so we can buy cheap WalMart goods, all under the mantra of the inevitably of globalism. If the goal of globalism was to raise the well being of foreign workers to our workplace standards and remuneration with the goal of producing a world economy that is balanced and equitable this might well be a laudable goal, but instead it is providing many corporate entities with a strategy to break unions, lower incomes, diminish workplace safety, export their pollution, and generally enforce a lowest common denominator ethos rather than a highest common denominator.
Pensions are inextricably tied to a much more complex economic structure, and unfortunately we seem to be handing more and more power over to corporate interests. It is interesting to reflect on the historical record of business caring about its employees. Throughout history the record of both business and the elites has not been to serve the well being of the common man, but to use them (after all, why do we currently call workers a "human resource" rather than personnel?) as a resource to exploit at the lowest cost for the greatest gain.
Your guest talks about the need to save. How does a single mother working at minimum wage save anything? In her life she will work far harder than most of us will ever consider and will have far fewer pleasures. Yet, her retirement will be an extension of the same. Never in this woman's life will she share in the leisure and pleasures which you and I enjoy, Rex. And, there are a lot of those women in our economy.
I don't have any starry-eyed utopian beliefs (I'm far too old), however, I think that we are sitting in a pivotal time where very powerful interests are seeking to consolidate power, and manage a world economy without much concern for individual national or regional interests.
Kitimat, British Columbia
I am fortunate enough to earn a good living and have a good pension. I would be happy to entertain changes to the OAS and even CPP if truly required, and agree with many of the callers today that "Freedom 55" is no longer attainable in this day in age. However, I would be more comfortable with this government's stated goals with respect to OAS if they would engage in a meaningful debate on which essential policy goals are important to Canadians. Given the choice between OAS/CCP and more prisons and/or mandatory prison sentences, I think Canadians would opt for retaining these important social safety nets. I truly hope we are given a choice to have this debate outside of a general election, and that the government respects the views offered. These issues should not be determined by ideology.
I only heard the beginning of the show, but by the comments on the webpage it seems that today's conversation is ignoring the root cause of this problem. Western society, as a whole, has decided it is no longer worth the effort to replace itself.
Once upon a time, it was taken as a given that the costs and sacrifices required to raise a family were worthwhile; the majority of folk married and raised children, with the expectation that those children would take care of them in their old age. Over the last generation, aided, perhaps, by easy access to contraception, abortion and no-fault divorce, the traditional value of self-sacrifice has been replaced with self-indulgence. With fewer people bothering to raise families, we are left with the demographic crisis causing the funding shortfall being discussed today.
I suggest that it is society's changing value system and the resulting demographic crisis that is the real story here, not the plethora of funding crises that will inevitably result.
Vancouver, British Columbia
I'm not sure that I've heard a discussion about the amount of income the government will receive as as many of the baby boomers die from RRSPs. I haven't seen the statistics but I do know that as we die, whatever left over RRSP funds we have will all come into our estate income at once and, depending on the amount, be taxed at the higher rates. I learned about this as I settled the estates for my parents. Has there been any sharing of this information from the government?
North Vancouver, British Columbia
It's shockingly cavalier of the PMO and Mr. Harper that they would wait until after the election to raise this issue. Also there is no reason OAS/GIS/CPP can't be improved and maintained, it would just require us to demand an end to corporate tax cuts and increase the tax rate for the wealthiest ten per cent of Canadians. As a 24-year-old employed with no pension I can say that my demographic will not tolerate these trespasses.
We live in the best country in the world. We have the best health care system and social programs. We live in a peaceful safe environment and are one of the few (probably 5) countries in the world that is a true democracy. What's the issue here? Everyone stop whining. If this program needs to be funded, Mr. Harper please restore the GST to seven per cent.
North Vancouver, British Columbia