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Let’s defend real pensions

Of course, the country can afford pensions for some people. Pretty good pensions, in fact. CEO’s and the Executive ranks are doing quite OK in their retirement.

By Larry Brown
National Secretary Treasurer
National Union of Public and General Employees

photo of Larry Brown, NUPGE National Secretary-TreasurerOttawa (04 May 2012) - There is a perception in Canada these days that workplace pension plans are relics of an older era, luxuries that are simply not affordable in these leaner times.

And defined benefit pensions? The real kind of pension, where people get a set amount per month based on their years of service? Those were the days, alright. But like hula hoops and cars with tailfins, they are from the past, dying out fast.

What nonsense.

Why would workplace pensions or defined benefit pensions no longer be affordable? Canada is not a poorer country than it used to be, quite the opposite. Canada’s GDP has increased considerably over the last few decades, even after factoring out the effects of inflation.

The CIA World Handbook, for example, says our per capita real value GDP has increased from $23,300 per person in 1999 to $39,400 per person in 2010. That was in 2010 when we were still seriously affected by the 2008 economic collapse. So there is, by any measure, more wealth in this country but somehow we’re told we can’t afford pensions any longer.

Of course, the country can afford pensions for some people. Pretty good pensions, in fact. CEO’s and the Executive ranks are doing quite OK in their retirement.

Shaw Communications has a pension put aside for its former CEO, valued at $71,039,000. The CEO of Potash Corporation of Saskatchewan has a pension worth $20,789,853. The Toronto Dominion Bank CEO has a pension worth $33,940,000. The list of this incredible largess for CEO’s is a long one. Some folks are doing quite well in retirement.

As a society we can afford pensions; we can afford to have decent defined benefit pensions. But we have let the situation deteriorate to the point that such pensions are almost an endangered species. If we, as a society, value pensions for workers we should – and we can – put policies into place that will encourage the development and maintenance of such plans.

Here are three ideas:

1) If an employer doesn’t have a workplace pension, it should pay higher Canada Pension Plan (CPP) premiums.

Why should an employer that offers employees the protection of a workplace pension, pay exactly the same CPP premium as an employer that doesn’t offer one? The employer with a pension plan is providing a workplace benefit that incorporates a major social benefit. The employer without a pension plan is creating long term social costs as those employees retire.

If employers without a workplace pension paid more CPP premiums their employees could at least retire with a higher CPP payout for those years of service.

2) We should provide a financial incentive for employers to set up pension plans.

We allow our governments to provide incentives and tax breaks for pretty much every reason imaginable with no measurement of the effect of all this incentive money. Why wouldn’t we provide incentives for something that will have an immediate and measurable social benefit – not to mention an immediate economic benefit of a healthier economy? Having seniors with enough money to live a decent life on retirement is surely worth a small portion of our public spending.

If an employer provides a pension in their workplace they should get a financial incentive – and if they provide a superior defined benefit pension plan they should get a superior incentive.

3) The federal and provincial governments should set up a pension guarantee fund to bail out those funds that, for legitimate reasons, run into financial difficulties. This fund should not just be paid for by employers with a pension plan but should be heavily supported by government monies.

Expensive? Compared to the 2008 bank bail out of approximately $114 billion Canadians are only learning about, a few billion dollars to ensure that seniors don't fall into poverty because their pension plan collapsed is small change.

Governments of all stripes pay lip service to the importance of pensions for retirees. It’s time that lip service was matched by action. It could be done. It’s not complicated but it is necessary.

NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE