Tom Walkom writes that the only real pension is a defined benefit pension -- the kind of pension which allows you to know how much you will receive in retirement -- like the Canada Pension Plan. For the past thirty years, private pensions have been disappearing, through company bankruptcies. Or they have been replaced by what Walkom calls bogus pensions -- defined contribution plans, where workers know how much they contribute, but they have no idea how much money they will receive when they retire.
Last week the Harper government introduced a new "pooled pension" scheme. These pools of capital are essentially group RRSP's, which -- like all RRSP's -- are voluntary retirement plans. It all sounds very wise. But, as is the case with so much of this government's legislation, more is less. Walkom writes:
And the best real pension plan going is the CPP. It is solvent, big enough to remain that way and relatively cheap to operate.
It is also compulsory, which prevents free riders — either employees or their bosses — from gaming the system.
Certainly, an expansion of the CPP is the best way to deal with the 60 per cent of workers — particularly younger workers in non-union shops — who have no other pension plan.
It doesn’t rely on the good intentions of employers (which appeals to labour unions). And by taking the strain from programs like Old Age Security, it saves taxpayers money — which appeals to fiscal conservatives.
And, until Quebec and Alberta sabotaged Jim Flaherty's plan to beef up the Canada Pension Plan, it looked like Canadians could count on real pensions. Now the government has presented a plan that will do nothing for those close to retirement; and it will offer no security to the young, who -- for that reason -- will probably opt out of it. The only people who will benefit from the new proposal are those who work for financial institutions, which will administer it. Remember, this government is pathologically adverse to government involvement in anything -- with the exception of defense.
If the government is intent on implementing an opt out provision, I suggest it let Quebec and Alberta opt out of an expanded CPP. I suspect that the residents of those provinces -- when they see what is happening -- will clamour to get on board the train before it is too late.
That's the best way to put an end to the pension shell game.