Baby steps on pension reform
TheStar.com – Opinion/Editorial – Baby steps on pension reform
Published On Sun Nov 01 2009
Finally, Canadians are seeing movement on pension reform.
It took a rally by distraught Nortel pensioners on Parliament Hill to propel the issue onto the political agenda. It took a set of concrete commitments from the federal New Democrats to shift the debate from vague assurances to tangible reforms. And it took a concerted push by the media, organized labour, seniors and all three opposition parties to convince the Conservative government that retirement security is no longer a sleeper issue.
The changes announced last week by Finance Minister Jim Flaherty were modest and in most cases apply only to the 7 per cent of pensions regulated by the federal government. Still, it is encouraging to see action after months of deliberation.
The minister pledged to:
* Prevent federally regulated firms from taking “contribution holidays” (skipping payments to their pension plans).
* Boost the allowable surplus in pension funds from 10 per cent to 25 per cent of assets, with the aim of encouraging companies to insulate themselves against future economic shocks.
* Require companies terminating their pension plans to pay all benefits owing to their workers.
Welcome as these technical adjustments are, they leave most workers and pensioners unprotected. They offer no relief to employees of private companies whose pension plans are in deficit. They provide no help to retirees left in the lurch by bankrupt firms. And they overlook the 230,000 seniors already living in poverty.
“Our government has listened carefully to Canadians,” Flaherty said. “We understand the value of secure and sustainable pension plans.” If that is the case, the minister and his provincial counterparts will have to go much further, preferably in a coordinated way.
That hasn’t been the pattern so far.
Saskatchewan, Alberta and British Columbia are working on a regional pension program to provide coverage for workers with no company plans.
Ontario is poised to announce the first instalment of its pension reform package this month, with more changes to follow in 2010.
Quebec is taking responsibility for the pension assets of Nortel employees living in the province.
Premier Dalton McGuinty has called for a national pension summit to get everybody moving in the same direction. What he got from Ottawa, instead, was a working group on retirement income adequacy, headed by University of Calgary economist Jack Mintz and advised by the finance ministers of five provinces (British Columbia, Alberta, Manitoba, Ontario and Nova Scotia). It will report to Flaherty and his provincial counterparts at their Dec. 17-18 meeting in Whitehorse.
The hope is that the panel’s blueprint will produce a consensus, allowing Ottawa and the provinces to proceed collaboratively. The fear is that each government will cherry-pick the measures it likes.
Meanwhile, Flaherty is giving short shrift to the good ideas bubbling up outside government. These include an overhaul of Canada’s Bankruptcy Act. which now gives other creditors precedence over the workers and pensions of a failed company; a national pension insurance plan; an expansion of the Canada Pension Plan with a voluntary “supplemental CPP”; and an increase in the guaranteed income supplement to lift poor seniors out of poverty. These suggestions deserve serious debate.
Last week, the Harper government went from a standstill to baby steps. What is needed now is a more ambitious pace and a more comprehensive approach. A national summit would be a good start.
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