Expanding CPP will help all Canadians

Posted on June 18, 2016 in Social Security Policy Context

VancouverSun.com – Opinion
June 17, 2016.   HASSAN YUSSUFF

As Canada’s finance ministers prepare to meet in Vancouver next week, what seemed like long-dead anti-Canada Pension Plan arguments are starting to rear their head.

Whether it’s you, your parents or your grandparents, chances are you know someone who is struggling in retirement. But groups like the Fraser Institute are trying to downplay the issue of seniors’ poverty and the need to expand the CPP.

Turns out the institute uses the outdated measure of Low Income Cut-Off (LICO), which has not been re-based by Statistics Canada in 24 years. LICO measures compare the incomes of seniors to levels deemed acceptable in the early 1990s and not to the incomes of other Canadians today.

Using Statistics Canada’s internationally-recognized Low Income Measure, we find that one in nine Canadian seniors is low income, based on our most recent (2013) data. In B.C., approximately 12.5 per cent of seniors are living with a low income. For single seniors, the low-income rate is as high as 26 per cent, even higher for single women.

In and around Vancouver, one of the most expensive places to live, about half of the senior population gets by with less than $25,000 a year.

There is a clear trend: seniors’ poverty is rising in Canada — it has nearly tripled since 1995. In addition, one in every three Canadian retirees counts on the Guaranteed Income Supplement — a last-ditch benefit for seniors without adequate retirement incomes — to keep them afloat.

Statistician Richard Shillington recently analyzed Canadian seniors’ income and retirement savings. He found that only a small minority (less than 20 per cent) of middle-income Canadians retiring without an employer pension have saved anywhere near enough for retirement.

Here in B.C., the number of seniors has grown by nearly 50 per cent in just the past decade. Over 90 per cent of seniors in B.C. receive CPP benefits. In Metro Vancouver, approximately 85 per cent of seniors with income receive CPP benefits.

If it wasn’t for the CPP, B.C. seniors and local economies would already be in serious trouble. But the CPP, as it stands, is not enough to bridge the gap. It’s hard to imagine working your entire life and being asked to get by on the average monthly CPP benefit of only $550.

Historically, CPP benefits were set low on the assumption that most Canadians would have another pension plan through work.

But looking at the retirees of tomorrow, only two in five Canadian employees (and one in four private-sector employees) have a pension at work. Even for those who do, workplace pension coverage has been declining for years and the plans that still exist are under constant threat.

As a result, millions of Canadians are on track to retire with more debt and low or significantly lower incomes. Not just individuals, but also businesses, and local economies will bear the consequences.

It’s worth noting that during the entire seven years the last CPP contribution increase was phased in, starting in 1997, employment rose and the economy grew steadily — and that time benefits to workers weren’t even increased.

Universal expansion of the CPP is the best way for our country to turn things around and avoid a serious retirement savings crisis.

According to Shillington: “There should be no debating the fact that the CPP delivers a defined benefit and indexed pension at a reasonable cost — a cost that few individuals could ever match by investing on their own or through anything but the largest employer pension plans.”

All Canadians, non-union as well as union members, deserve a stable and secure pension. The CPP is already cost-effective, sustainable and universal. It follows workers from job to job across the country, something that’s increasingly important for younger generations. It just needs to be better. That’s why we are calling on our provincial and federal governments to work together to make that happen.

Hassan Yussuff is the president of the Canadian Labour Congress, which represents 3.3 million workers in Canada.

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