Sunday, November 01, 2009

The Canadian Labour Congress (CLC) is waging a campaign for the improvement of the Canadian pension system, to guarantee a decent standard of living for all Canadian retirees. Here, from the Canadian Union of Public Employees(CUPE) is a news report on this campaign and the times for the first cross country public training forums that will be held on the issue.
Retirement security for everyone:
The Canadian Labour Congress (CLC) and its affiliates are waging a campaign on pensions, and CUPE is proud to be part of it on behalf of its active members and retirees.

A series of training sessions for this campaign will be held in several cities this fall and winter. The main thrust of the campaign involves lobbying provincial and federal governments to make bold new changes that will secure pensions for all workers.
The principal demands of the campaign are:
**Double benefits for the Canada Pension Plan (CPP).
**Increase low-income (GIS) pensions by 15%.
**Introduce a national system of pension insurance.

In making these proposals, we are championing the same progressive values that changed our health care system with the advent of Medicare more than forty years ago. We can make a similar choice for pensions today and create a system where no Canadian is left behind.
Forum Locations and Details
Newfoundland and Labrador
**St. John's Holiday Inn, Portugal Cove Road, Tuesday November 3, 2009, 9:00 am. In conjunction with Newfoundland & Labrador Federation of Labour Convention; open to the public.
New Brunswick
**Bathurst, USW Union Hall, Wednesday November 4, 2009, 7:00 pm. (Bilingual event).
**Saint-John, Courtney Bay Inn, Tuesday November 3, 2009, 7:00 pm. (Bilingual event).
British Columbia
**Justice Institute, New Westminster, November 5, 2009, 6:30 pm.

Forums will also be coming up in the next few months in Windsor, Sudbury, Toronto, Ottawa, and St. Catharine's (Ontario), in Brandon and Winnipeg (Manitoba), and in Edmonton and Calgary (Alberta).

To find out more about any of these events, or for questions, get in touch with the Canadian Labour Congress.
Here is the summary of the Canadian Labour Congress campaign referred to above.
Retirement Security for Everyone!:
Over the past year, Canada has been hit hard by the deepest economic downturn the world has seen since the 1930s. Hundreds of thousands of good-paying jobs have been lost and the retirement savings of countless Canadians put at risk by the financial meltdown and corporate bankruptcies.

Many today, even those with jobs are wondering if and when they can ever retire. They have good reason for concern.

Recent events have exposed major faults in our pension system. Our public pensions – Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) plus the Canada Pension Plan - provide a secure income in retirement. But even the maximum value of those pensions falls far short of what people need to maintain a decent standard of living after retirement.
The private portion of our pension system is in deep trouble
About one in five private sector workers belong to a private pension plan. Very few non-unionized workers, with the noted exception of managers and professionals, are covered by plans. Many of the plans which do exist are on shaky financial ground because of low interest rates and the recent collapse of stock markets. Some workers have discovered that when their plans get into financial trouble, there is little help available.
RRSPs have failed to deliver
RRSPs are often billed as the solution to our pension woes. They are supposed to fill the gap left for those not covered by private pension plans – but RRSPs have failed us. The average worker approaching retirement today has saved only enough to buy a monthly pension of about $250 per month.

RRSPs have not worked because many Canadians cannot save enough to overcome the built-in hurdles of high administrative fees (which in Canada are among the highest in the world) and highly variable and uncertain financial returns.
It's time for change
Decision-makers can hear the growing calls for pension reform in Canada, despite the strong and loud opposition from vested interests in the financial industry. Employers who sponsor pension plans also recognize that supporting decent pensions through public rather than private arrangements would lower their costs and help level the competitive playing field between them and businesses who have offered no pension plans for their workers.

People should not be left to fend for themselves in retirement. It's time for a change in emphasis toward public pensions and toward greater security for people who belong to existing employer plans.

That's why the Canadian Labour Congress is proposing three key reforms that would benefit all workers, improve retirement income security, and gear Canada's pension system to better fit the needs of a changing economy.
The CLC Plan: Retirement Security for Everyone
Double benefits for the Canada Pension Plan (CPP). We propose to phase-in a doubling of the proportion of average earnings replaced by CPP from 25% to 50% over seven to ten years, to $1,635 per month. This would be financed by a modest increase in worker and employer premiums (3% spread over several years).
The benefits of investing in a stronger Canada Pension Plan are clear:
**The CPP already covers 93% of working Canadians and offers an accurate sense of the income they can expect in retirement.
**The CPP is highly risk tolerant because of its size and it has the lowest administration fees of any pension plan in the country.
**The CPP is highly portable – no matter how many times they change jobs, workers will still be covered. Why shouldn’t we build on this successful model?

Increase low-income (GIS) pensions by 15%. This would give low-income seniors up to an additional $110 per month, enough to move virtually all seniors above the poverty line.

Introduce a national system of pension insurance. An insurance floor should be set for defined pension plan benefits through a system funded by contributions from pension plan sponsors. This would be a federal initiative covering federally-regulated pensions but Ottawa should enter into negotiations with the provinces to create a national system.
The Choice: “Move Forward Together” or “Fend For Yourself”
In making these proposals, we are championing the same progressive values which changed our health care system with the advent of Medicare more than forty years ago. We can make a similar choice for pensions today and create a system where no Canadian is left behind.
All of this is well and good, but Molly suggests that it is hardly enough. One failing is that neither the private insurance plans nor the CPP allow for any input on the part of workers contributing to said plans nor of the retirees who are collecting the benefits. In other words workers and retirees are obliged to take both the good intentions and the competence of the managers, both private and public, on blind faith. The Congress of Union Retirees, representing numerous Canadian pensioners, have proposed "legislation to require participation of retirees in the governance of their pensions". Personally I think that there should be such democratic safeguards for both the private pensions and the CPP. The fate of many pensions plans in recent years and the continued alarms over the viability of public plans in many countries says that such important instruments of financial security should not be left to the supposed competence of the supposed experts.
There is also another option to both private and state administered plans such as the CPP. The viability of cooperative plans is hardly ever considered. This option is actually rarely even mentioned. The institutions to administer such plans, the network of credit unions that cover Canada is already at hand. Molly would suggest several aspects of such an alternative system, one that could be just as stable as the CPP. One is that participation would be voluntary, and that not just individuals (as with RRSPs now) but also workers covered by company pension plans that they may doubt the stability of could opt to have their pension contributions (and matching ones from their employers) deposited in such coop plans. I would also suggest that such plans be a joint effort of several credit unions, rather than individual institutions. This would help to assure stability, as would a fund guarantee for deposits in these plans. The question of stability would, of course, be paramount, and the investments that such funds could undertake would have to be restricted- unlike the situation in many RRSP plans today. To offset the possible spread between stability and return and make these plans more attractive I would also suggest that there be a tax credit attached to deposits in such funds. This would be similar to that already offered by many labour sponsored funds today. The coop funds would be similar to the labour sponsored funds in that they would be restricted to domestic investment, but they would be further restricted from providing "venture capital" ie less secure investment.
The advantages of such coop pension plans would be many. They could provide stability that would perhaps be equal to that of the CPP and certainly greater than most RRSP funds provide. It might even be attractive for people to eventually transfer their accounts from the CPP to such coop plans. Like the labour sponsored funds they would assure a supply of capital for Canadian (or provincial) enterprise. If for no other reason this should ensure them a tax credit, even if the percentage would obviously be less than the labour sponsored funds who invest in more risky enterprises. The mechanism of governance is at hand in the cooperative model of the credit unions, and if one wishes a democratic participation of workers and retirees in their pension funds the creation of this would be far more straightforward than with the private plans of, especially, the CPP.
There would be, of course, many difficulties, and the details would require a lot of thought and planning. The benefits, however, are such that this 'third way' should be considered rather than ignored.

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