Time to Start a Real Discussion about Retirement Income
I am concerned that a growing number of New Brunswickers will not have sufficient income in their retirement. I know that some low income seniors in my riding find themselves having to make unacceptable trade-offs, deciding whether to buy groceries or fill their prescriptions, for example.
It is estimated that two thirds of Canadians have no workplace pension plan. Based on data from income tax returns, only one quarter of Canadians contribute to a Registered Retirement Savings Plan. For many, that leaves only the Canada Pension Plan (CPP), a plan which is designed to provide 25% of the salary that had been earned while working, a far lower percentage than that provided, on average, by other industrialised countries. The situation is even more challenging for people who have never paid into the CPP.
Some readers may question the sincerity of a commentary on retirement income written by an MLA, given the past reputation of MLA pensions. As an MLA, I pay into the same pension plan, under the same terms, as the vast majority of civil servants. This represents a welcome change from the past set-up for MLA pensions.
The new federal government is committed to expanding the Canada Pension plan. Following a meeting of provincial finance ministers before Christmas, it was agreed everyone would look at how to move forward on expanding the CPP and bring their suggestions to a second meeting in June. Saskatchewan Premier Brad Wall appears to be the only Premier opposed to the idea. The Globe and Mail has reported that Premier Gallant supports improvements to the CPP, but he has not made any public statements to that effect.
Now is the time to have a public conversation about the financial security of New Brunswick seniors. I have repeatedly called for a public inquiry into the adequacy of retirement income for New Brunswickers. The Greens campaigned on this in the last election. With discussions beginning within and between governments on improving the Canada Pension Plan, the Gallant government needs to engage citizens in a broad discussion about the adequacy of retirement income in our province.
The former Alward government began looking at pension reform in 2010 with its Task Force on Protecting Pensions. It was formed in the wake of the very public failure of two private sector pension plans. However, the Tories Task Force never produced any recommendations on protecting private sector pensions, nor did it issue any report. Instead, it was redirected to address the cost of public sector pensions. The outcome is history now. Public sector pensions were converted from defined benefit plans to the Dutch system of the so-called Shared Risk plan, but failed to grandfather-in retirees, leading them to take the government to court, as they lost the protection their pension income had from the ravages of inflation.
Most provinces and all federal political parties except the Conservatives support an expansion of the Canada Pension Plan. The objective is to increase the basic financial security for all seniors. Premier Gallant has thus far been silent on the matter. On the other side, the Canadian Federation of Independent Business is mounting a lobby campaign against any expansion of the CPP, to avoid an increase in the employer’s contribution to their employees pensions. The provincial Tories opposed an expansion of the CPP when they held power.
The CPP is one of the most secure pension plans in the world. It is a predictable and stable defined benefit plan which is adjusted for inflation, so it does not erode the purchasing power of seniors, unlike shared risk pension plans. Shared risk pension plans are just the opposite. They are unpredictable, since protection from inflation can be eliminated and the basic benefits can be cut.
The problem with the CPP is it is no longer sufficient to meet the basic needs of seniors. Those seniors whose income is dependent only on the Old Age Security Program and the Guaranteed Income Supplement face even tougher challenges.
It’s time for the Premier to make his position clear. In light of our rapidly aging population, will he engage in an open and broad based discussion of how best to provide overall income security for seniors into the future? What is his position on expanding the CPP?
We need a public inquiry into the adequacy of retirement income for all New Brunswickers. A Royal Commission is one such way to do so. Whatever the form it takes, such an enquiry needs to get underway without delay, given the discussions about expanding the CPP are now taking place behind closed doors. The financial security of our growing population of senior citizens is too important to ignore.