Hot! Strengthen Canada Pension Plan instead of creating Ontario version

TheStar.com – opinion/editorials – Canada needs reforms to the federal pension plan, not a duplicate system in Ontario.
Oct 18 2013.   Editor

They may not like to hear it, but Ontario boomers are fast becoming the new seniors and these aren’t the best of times to be growing old. Many are in debt with limited savings and will be reliant on the meagre benefits from a Canada Pension Plan that hasn’t been reformed for years.

But the outlook isn’t all gloom. The fact that this demographic giant is awakening on the march toward old age means that delayed improvements to federal pensions will no doubt become passionate fodder for election campaigns. When it’s survival versus poverty, even the driest of policy becomes alluring.

Premier Kathleen Wynne is right, then, to push the issue of pension reform with federal Finance Minister Jim Flaherty, who so far has done nothing to address a clear and growing problem. In fact, Wynne should take a leadership role and urge all provinces to demand increased benefits under the $183-billion Canada Pension Plan. Its benefits are capped at $12,000 a year, far below the poverty line, which for many means a precarious old age.

But Wynne is mistaken to suggest the creation of a separate Ontario pension plan as an income supplement for retirees. Certainly, it could be interpreted as political manoeuvring, a way to put pressure on the federal government for better benefits. But for the good of all, pensions should stay under the domain of Ottawa, which already has the systems in place to do the job properly. However effective an Ontario program might be, there’s no need to pay for such duplication.

Equally important is the principle of national unity. Canada must retain a coherent pension plan that benefits all equally (aside from Quebecers, who for political reasons have their own tailor-made plan.) Do we really want a P.E.I. pension? Or an Alberta plan? A nation-wide pension plan is a fundamental part of Canada’s social safety net. It should be enhanced – not balkanized.

What Wynne should do is use her position as leader of the biggest province to rally other premiers — along with aging voters — to demand a Canada-wide solution.

At the same time, pressing for a supplemental provincial pension would be a substantial risk to the Liberal government’s political future. Ontarians are in no mood to contribute billions to a brand-new plan. Most barely have money left over to put into savings after paying taxes, mortgages and university fees for children whose job prospects are shaky at best. And after Ontario’s Auditor General estimated that the Liberals squandered some $1.1 billion on gas plant cancellations, the government lacks the political clout needed to pull off this scheme. It’s too much, way too soon.

So it has been curious to hear Wynne publicly muse about creating a homegrown pension fund, ostensibly created to help retirees with declining traditional private pensions — and the inadequate benefits of the CPP.

Now that Wynne is positioning herself as the “jobs premier,” it’s going to be a tough sell to force employers to pay more for each worker under an Ontario pension plan. As the Star’s Rob Ferguson reports, employers currently match the 4.95 per cent of pay that each worker contributes to the CPP, with a maximum of $2,356 a year. There’s no need to put at risk Ontario’s fragile economic growth.

Still, Wynne is right to raise serious concerns about dwindling pensions. She should encourage her provincial counterparts to work with her and push harder for federal pension reforms — benefits that will help all Canadians as they head into old age.

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1 Comment

  1. I am strongly opposed to the creation of an Ontario Pension Plan. I do not dispute that the current levels of CPP contributions to our aging population are often inadequate, however I believe our provincial government is ignoring larger systemic issues by focusing only on this aging portion of our population. Premier Wynne is catering to this demographic by calling for an Ontario Pension Plan, and for good reason: these are the majority of the voters in our country. As Statistics Canada asserts in a recent study: “older people are were likely to vote, with turnout rates increasing from 70% among 45- to 54-year-olds to a peak of 82% among those age 65 to 74” (Statistics Canada, 2011). Unarguably, the creation of an Ontario Pension Plan which raises the level of income for the older portion of our province will sway votes in Wynne’s favor for future elections.
    Aside from the ulterior motives I believe are at play, I fail to see how the creation of a program which is already being offered at the Federal level is a good use of Provincial resources. The author is right in suggesting that Wynne should use her political leadership to advocate for the rights of these people at the national level, if this is what she truly believes in. Wynne claims that “people are Ontario’s biggest strength” (Office of the Premier, 2013). I would like to see this philosophy applied to all people in Ontario, not just the largest group of voters. If we really want to invest in our people, let’s start when they are young so they have money to save for later in life. Instead of an Ontario Pension Plan, we need resources to be focused on increasing our minimum wage and levels of social assistance. People need an income which leaves room for saving and RRSP’s therefore allowing them to plan for their financial stability later in life. I am not denying the relevance of the issue at hand, just sharing an opinion that perhaps we need to consider the larger context of why people are poor in their old age, and how we can work to eliminate poverty for all. Rather than create a new program, we should amend the current Federal pension plan in place. There is no need to re-invent the wheel.

    Statistics Canada Voting Information:
    http://www.statcan.gc.ca/pub/75-001-x/2012001/article/11629-eng.htm#a2

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