For your entire career you have worked hard and built a good life for your family. Every paycheque, your deductions included a small amount that was tucked away in your public pension plan. When retirement came, you expected to be able to live in dignity with some measure of financial security.
Yet this recession has shown that things might not be as secure as you have been led to believe. Your RRSP has been decimated by the global financial crisis. If you had been counting on your company pension plan, you might be in for an even greater surprise.
Over the past year more than 5,700 companies have filed for bankruptcy. In many of those cases, the pension plans were underfunded and workers stood to lose out to other creditors.
In other words, the private elements in the system – workplace pension, RRSPs and private savings have fared badly in the collapse of the financial markets. On the other hand, the public elements of the system are rock solid – Old Age Security (OAS), the Guaranteed Income Supplement (GIS) and the Canada & Quebec Pension Plans (CPP/QPP). Yet, Canadians trying to protect their savings are prevented by the current rules from taking full advantage of the safety and savings available to them in public pension plans.
The NDP has a plan that we think is workable. More than 266,000 Canadians are living in poverty, while our federal government plans to reward highly profitable corporations with another $1.5 billion tax cut in January. Private savings cost many times more than savings in public pension plans and Canadian mutual fund fees take more than $25 billion a year out of Canadians’ savings.
What my party proposes is the following:
Eliminate seniors’ poverty by cancelling the January 1st corporate tax cut and increasing the GIS by $700 million a year (less than half of the proposed corporate tax cut).
Phase in a doubling of CPP benefits from about $907/month to almost over $1,800/month. The cost would be an additional 2.5% of wages (matched by employers). This is less than what we pay for private savings plans.
Put a system in place to secure work place pension plans to guarantee pension pay-outs up to $2,500/month in case of failure.
Amend Canada’s bankruptcy laws to ensure that monies companies promise but fail to contribute to workplace pensions plans are given the same status as unpaid wages and go to the front of the line of creditors for payment.
Hold a public Pensions Summit with representation from all invested parties to consider these and other proposals for addressing the national pension crisis.
The bottom line is that we have it in our power to mitigate the impact of the economic recession by public means. It is the responsibility of our federal government to play a leading role in helping Canadian citizens hit hard by this crisis. It is simply not good enough to continue giving more corporate tax breaks in the hope that this will trickle down and create more jobs. We must help those who are retiring
The NDP plan to reform Canada’s retirement savings system is a step in the right direction. Hopefully the Conservative Government can work with us to make this happen.
Tags: pensions