"The Task Force has come to the wrong province to launch their investigation if they're looking for the right answers on pension reform," says Nancy Furlong, Secretary Treasurer of the Alberta Federation of Labour. "The Alberta and B.C. governments have been pointing us in the wrong direction. Their proposed ABC Pension Plan is a meager supplemental program that employers can simply opt out of and which shifts all the risks onto the shoulders of individual Canadians. We've seen the terrible impact that fluctuation on the global equity markets can have on such plans and on workers and their families."
The Alberta Federation of Labour's actuarial analysis of the ABC Pension Plan has revealed striking flaws: the proposed plan, even when added to existing benefits provided by CPP and OAS, would generate as little as 14 per cent of pre-retirement income for individuals enrolled in the plan, which falls far short of the recommended threshold of 70 per cent. Furthermore, employers are allowed to opt out and even those who join the plan wouldn't be required to match the contributions made by individual employees. Finally, the ABC Plan would be a defined contribution plan, rather than a more secure defined benefit plan. Defined contribution plans are more risky because the value of the benefits can be significantly lower than expected, particularly in economic downturns and periods of increased inflation.
"Instead of simply sticking on a band-aid, like the ABC voluntary supplemental plan which lures Canadians into a false sense of security, the federal-provincial task force should commit to a significant expansion of the Canadian Pension Plan. The CPP is easy to reform and improve and is available to all Canadians," says Furlong.
If the task force does consider plans to supplement the CPP, it should insist that participation is mandatory. Otherwise, employers will continue to simply opt out or cut back contributions.
Improvements must also be made to protect private sector pensions. The Alberta Federation of Labour calls on the task force to examine legislation that will protect these plans and ensure that workers get what they bargained for. In particular, legislation should include insurance that protects Canadians from the fallout if their pension plans go bankrupt.
The Alberta Federation of Labour believes that the task force should make the pension reform debate public and open to all stakeholders, starting the process with a national summit on pension reform.
"It is high time that we take a good look at how to best provide retirement income to Canadians. And what we need is a cohesive system, like significant improvements to CPP that makes a guarantee to Canadians that they won't face the prospect of living in poverty in their old age," says Furlong. "The federal-provincial taskforce shouldn't be fooled by the ABC plan's promises."
For more information call:
Nancy Furlong, AFL Secretary Treasurer @ 780-483-3021 (office); 780-720-8945 (cell)