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pension

A new ranking says Canada has one of the best retirement plans around, but there may be a debt-related downside.
The federal government will not help Ontario in any way in implementing the Ontario Retirement Pension Plan (ORPP). "Take a hike," was the federal government's basic message. We will not help you improve pensions unless you do it our way. And our way is simple: Canadians should do it themselves. Just figure it out. There is no retirement crisis, says the Harper government. Never mind that our mutual fund industry has among the highest fees in the world, while our best public pension funds have among the lowest costs despite excellent performance. Never mind that the capital markets are increasingly tilted against the interests of ordinary people. Never mind that employers have been abandoning defined-benefit plans for decades. Never mind that some of the most credible researchers in the country have called for a significant enhancement to the Canada Pension Plan.
“He supports it one day and attacks it the next,” John McCallum told reporters on Thursday about the prime minister's “flip-flop” on the issue.
On May 1 Ontario Finance Minister Charles Sousa will stand in the provincial legislature to deliver this year's budget speech. Imagine if Sousa were to surprise us all and take a different track -- one that sets out a new agenda to return Ontario to its historical position as the economic engine of the country.
Any solution must address the chronic under-saving that threatens to reduce the standard of living for a significant percentage of people earning from $30,000 to $100,000 once the pay cheques stop -- whether by choice or not. The people who should be using existing savings vehicles like RRSPs are not.
Recently, Treasury Board President Tony Clement reportedly floated a trial balloon which would see federal government retirees' annual health insurance premiums double. For my family, that would mean an extra $500 expense -- an amount which will add up to thousands of dollars over my lifetime. I deliberately chose to leave the private sector and join the government based on what was on offer.
Politicians are often derided because they treat the public with disdain, such as when governments try to bury bad news by releasing it when they hope no one pays attention -- say, at the end of a day close to the first long weekend of summer. This happened twice in just the past two weeks.
Fact is, Alberta's red-ink budgets have much more to do with real per-capita program spending being near historic highs. This also explains why so many Albertans "hiss" at the notion of a sales tax. To understand why the spending side of the government ledger deserves more attention, consider some statistics about Alberta's program spending, ones that take into account Alberta's population growth and inflation rate.
Imagine it's March, 2013 and you discover to your considerable horror that you must pay the government $9,000 in addition to the taxes you normally fork over. Sounds pretty far-fetched, doesn't it? Well, you and I, and every other man, woman and child in Canada are each on the hook for an extra $9,000 to pay for the $300 billion (or more) in promises to public sector pension plans that governments don't have the money to pay.
Earlier this year, the Canadian Taxpayers Federation (CTF) released a report showing that taxpayers put in $23.30 for every one dollar parliamentarians contribute to their pension plans. Politicians are reluctant to step away from the machine multiplying their money. Here are some dirty little secrets about those pensions.
With the budget coming up, we need to talk Old Age Security (OAS). The cost of the OAS program will explode, going from $36 billion in 2010 to $108 billion in 2030. Refusing to deal with this problem for partisan reasons would be completely irresponsible to future generations, if not shameful.
Rather than social programs to help the poor and vulnerable, to help seniors, there is an emphasis on fulfilling a right-wing agenda in areas such as crime. This reflects the lack of fact-based policy which is needed in a government that promotes economic growth.
Pooled Retirement Pension Plans are a good idea; one clearly worthy of pursuing. It is now time for the federal and provincial governments to pass legislation to allow for their existence.