Pensions legislation being introduced by the Harper government today (Thursday) will reward Tory friends in the financial services industry, but do nothing to help Canadians facing a looming retirement crisis, says Alberta's largest labour group.

"This is Harper once again putting corporate profits ahead of Canadian people. The Pooled Retirement Pension Plan (PRPP) is another giveaway to the financial services industry – it's just one more product they can sell to working Canadians while continuing to charge outrageous service fees," says Gil McGowan, president of the Alberta Federation of Labour, which represents 145,000 workers.

"The Harper pension plan will do nothing to help Canadians facing a retirement-income crisis. Using PRPPs is like trying to put out a forest fire with a squirt gun. They are nothing more than glorified Registered Retirement Savings Plans (RRSPs) – and the recent global recession taught us how flawed and flimsy they are," he says.

McGowan says PRPPs fall far short of what working Canadians need on multiple grounds.

•  They are not mandatory: Like RRSPs, only those with higher incomes will be able to buy them. Only 38 per cent of Albertans contributed to an RRSP in 2008, and the median contribution was only $3,200 per year. More than 60 per cent of all RRSP contributions come from people with annual incomes of more than $80,000. Only mandatory plans are effective at helping lower-income earners save for their retirement.
• Employers do not contribute: Without matching employer contributions, the PRPP is a glorified savings plan – one that those on lower incomes cannot afford.
• They are not defined benefit plans: Defined benefit plans like the Canada Pension Plan (CPP) provide security by guaranteeing retirement income based on how much has been contributed over a working lifetime. Defined contribution plans, such as PRPPs, means the entire risk of market fluctuations is borne by the individual. Retire during a market slump and you could spend the rest of your life in poverty.
• PRPPS are run by banks and financial institutions: The financial services industry has a history of charging outrageously high fees in Canada, about five times higher than CPP.

"Eight out of 10 provinces backed a plan for a modest expansion of CPP as the best way to tackle the retirement-income crisis. They were supported by economists, pension experts and 78 per cent of Canadians, according to an Environics poll. It's time for Harper to start listening to Canadians, but it seems he only has ears for his corporate friends," says McGowan.

"When the federal government abandoned CPP expansion in December 2010, Harper's excuse was that the fragile economy meant was 'now is not the time.' If timing is the only issue, we call on Harper to commit to CPP expansion when the economy is stronger, when he has eliminated the deficit. There will be no excuse to betray Canadians again."

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MEDIA CONTACT:

Gil McGowan, AFL president, 780-218-9888 (cell)

VANCOUVER – The leaders of Canada's provincial and territorial Federations of Labour today called on the premiers to use their annual meeting, currently underway in Vancouver, as a platform to protest Prime Minister Stephen Harper's "shocking abandonment of the kind of real pension reform that Canadians want and desperately need."

The Federation of Labour presidents, who collectively represent more than three million unionized Canadians, are meeting this week down the street from the hotel where the premiers are holding their annual meeting.

The union leaders were reacting to news that Prime Minister Harper's point man on the pension file, Minister of State for Finance Ted Menzies, has formally announced that the idea of expanding the Canada Pension Plan (CPP) as a solution to the country's looming crisis in retirement income is off the table.

"Last year at this time, eight of ten provincial governments, representing about three-quarters of the Canadian population, had come to an agreement that the most logical and cost-effective way to help Canadians save for their retirement was to expand CPP," said Jim Sinclair, president of the B.C. Federation of Labour, who is hosting the meeting of his counterparts from across the country.

"Now Prime Minister Harper is using his new-found majority to squash long overdue and much-needed changes that are supported by the provinces and a clear majority of Canadians. To make matters worse, he's offering an alternative – his so-called pooled-pension program – that will do nothing but funnel money into the pockets of big banks and investment companies. It's a shocking betrayal of hard-working Canadians. It's a slap on the face of all the premiers. And it's something that the premiers who support CPP expansion should not stand for."

Sinclair and the other Federation presidents argue that CPP expansion is far superior to Harper's Pooled Retirement Pension Plan (PRPP) because the CPP has far lower management costs, because the CPP provides a guaranteed benefit for retirees, and because employee contributions would be matched by employers.

"The PRPP is nothing more than a glorified RRSP and another vehicle that the banks can use to siphon huge fees from the retirement nest eggs of individual Canadians," says Alberta Federation of Labour president, Gil McGowan. "Every expert who has looked at this issue agrees that expansion of CPP is the best way to help Canadians save for their own retirements. It's clear the Prime Minister has allowed the narrow interests of the financial services industry to trump the broader interests of the Canadian public. He has also broken a promise he made to the premiers and Canadians in December when he said that plans for the PRPP and CPP expansion would both remain on the table for development. It's a betrayal, and the premiers shouldn't stand for it."

The Federation of Labour presidents will be attending a reception with the Premiers tonight. At that reception, they will ask the Premiers to include a response to the Harper government's announcement on CPP expansion as part of their joint communiqué tomorrow.

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MEDIA CONTACT: Gil McGowan, AFL president, 780-218-9888

Left-leaning labour activists gathered for an anti-Stephen Harper rally Saturday, voicing outrage over "broken promises" by the prime minster and support for another man, Jack Layton.

With only two days before the vote, members of the Alberta Federation of Labour (AFL) protested in downtown Calgary, a city seen as a Tory stronghold, against Harper's policies and "lies."

Holding placards high in the air, and shouting "Healthcare yes, Harper no," at least 100 people, many wearing New Democrat Party buttons, took a break from a convention to have their voices heard at the event.

Gil McGowan, president of the AFL, which represents 140,000 members, who called Harper a "promise breaker" said the rally was about sending two messages.

"The first was on the eve of the federal election May 2 we wanted to encourage Albertans to think about Prime Minister Harper's broken promises," he said.

"He made a promise to Albertans that his government would fight to keep oilsands jobs in this province but he has reneged on that promise by supporting the export of raw bitumen and the construction of the Keystone XL pipeline.

"He has also broken the promise to Albertans and other Canadians he made on support for expansion of the CPP as a solution to what we think is a looming crisis in retirement income."

A year and a half ago, finance minister Jim Flaherty met with labour movement activists at a meeting of the Canadian Labour Congress executive in Ottawa who said he agreed with the call for an expansion to the CPP.

"Six or seven months later when there was an opportunity for the government to put their money where their mouth was ... the Harper government decided to renege on their promise and in the process they left millions of Canadian retirees and Canadian workers who are worried about retirement out in the cold," McGowan said.

Paul Moist, CUPE national president, in Calgary for the convention and rally, said 65% of Canadians do not have a workplace pension plan.

He also said the recent rise of the NDP, to whom many protestors align their values, is "astounding."

"There is a kind of bouoyancy...they don't believe Harper owns all of Alberta or all of Canada," he said looking around the crowd of supporters.

"Elections are about trust and vision ... it seems Jack Layton has gained the trust of Canadians."

Paul Vargis, NDP candidate for Calgary Centre North, who attended the rally said the surge of support for the party is encouraging.

"We definitely have a chance," he said.

"We are getting senior support, support from environmentalists, improving the health care system."

Calgary Sun, Sat Apr 30 2011

Plans announced by the provincial government today to keep Albertans working longer are being viewed with concern by the labour movement.

“If Employment and Immigration Minister Thomas Lukaszuk is talking about providing supports and incentives to people who voluntarily choose to work longer, that’s one thing,” says Gil McGowan, president of the Alberta Federation of Labour (AFL), which represents 140,000 workers. “But if he’s talking about forcing people to work past retirement age against their choice, then he’s going to have a war on his hands. Working Albertans won’t take kindly to having their retirement dreams undermined or taken away.”

McGowan criticized the consultation process that led to today’s announcement, saying it was another example of the government listening to employers, but doing little to seek the opinions of workers.

“It appears there were  months of consultations with employers who want to keep their employees working longer, but little consultation with those who will be most affected – the workers themselves,” he says.

“Workers deserve to be able to look forward to retirement security at the end of their careers. The labour shortage must not be used as an excuse to allow employers to weaken retirement and pension policies so that people are forced to keep working by diminishing financial circumstances.”

- 30 –

Contact:          Gil McGowan, president, Alberta Federation of Labour @ 780-218-9888

Terry Inigo-Jones, AFL Communications Officer, 780-910-1137

Big fun in Little Buffalo

• Union members, human-rights activists and members of the Lubicon Cree took to the ice at the newly opened hockey rink in Little Buffalo at the weekend. The rink was built by donations and volunteer labour in a campaign called Operation Hockey led by the AFL Human Rights and International Solidarity Committee. For YouTube video ... and for Edmonton Journal article by Christina Doktor ...

Farm deaths spur calls for minister to change work-safety laws

• The recent death of three more Alberta farm workers led to several calls for the Alberta Employment Minister to extend health and safety laws to include farms and ranches. Letters urging swift action were sent by the AFL, NDP MLA Rachel Notley, the Alberta Liberals and by Wayne Hanley, national president of the United Food and Commercial Workers (UFCW) Canada. For more information ...

The fight for REAL pension reform continues

• The AFL called on the Alberta government to reverse its opposition to increasing Canada Pension Plan benefits now that Ted Morton has resigned from cabinet, after a new poll showed Albertans are still in favour, by a two-to-one margin. Meanwhile, the Canadian Labour Congress filed an Access to Information request to find out who lobbied against proposals for improving CPP. For more information and for the CLC release ...

Learn how to protect your pensions

• Union members interested in pension issues have a new opportunity to learn about these issues and to prepare themselves for a role in pension governance. Athabasca University is offering a course that exposes students to the fundamentals of pensions. The course can be taken from home by anyone who wants to know more about how our retirement income system works. It is ideal for people who sit as union-appointed trustees on pension boards or are thinking of doing so, but will also be of interest to people new to pension issues. For more information ...

 

Urgent Action

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Register NOW for the EDLC School - You have until Friday, February 18, to register for the Edmonton and District Labour Council School, which takes place February 25-27. For details or to register or go to the EDLC website.

Events

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• February 17 - Parkland Institute Annual Fundraising Gala
• February 18 - Deadline 2011 Edmonton and District Labour Council School (www.edlc.ca)
• February 20 - UN World Day of Social Justice
• February 21 - Alberta Family Day
• February 25 - Deadline for nominations for 2011 AFL May Day Solidarity Award
• February 25-26 - 2011 AFL Equity Conference, Calgary
• February 25-27 - 2011 EDLC School (www.edlc.ca)

Did you know ...

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• 1899: The Lubicon Cree are bypassed by Treaty 8 negotiators, so do not receive treaty benefits and a reserve has never been established.
• 1986: Inquiry Judge Davie Fulton files a report that supports the Lubicon. The Alberta government refuses to discuss his recommendations and he is fired by the federal government.
• 1990: The United Nations finds Canada in violation of the International Covenant on Civil and Political Rights over its treatment of the Lubicon people.
• 2005: The United Nations urges Canadian government to resume negotiations with Lubicon.
• 2007: UN Rapporteur on Housing visits the Lubicon community and witnesses families without access to potable water and poor sanitation conditions, The Rapporteur called for a moratorium on oil and extraction activities until a settlement is reached.

For more information ...

Every morning Robert McDonald gets up just after 4 a.m. in order to get to work as a delivery truck driver in downtown Edmonton for 6:30. Up until a year and a half ago, he worked as a pilot for a charter airline company until he lost his job suddenly and had to look for work elsewhere.

As a senior citizen, McDonald and his wife Lynne, who works part-time, are part of a small group of people who are working well into retirement age, whether by choice or necessity.

For the McDonalds, working past retirement age is a necessity.

When his job as a pilot disappeared, McDonald said the couple was close to paying off their condominium in St. Albert.

"Our plan was we would have had it paid off if I had had my job for another two years."

Feeling they didn't have enough saved for retirement, the couple decided to sell their condo and invest the money.
"We're hoping that will grow long enough and that we can work long enough that it will be enough to retire," said Lynne, who works part-time as a substitute teacher.

"That and win the lottery," added McDonald.

In the meantime, the couple now rent a condominium and continue to work until they feel their retirement savings are adequate.

But Lynne says she worries about what might happen when they are no longer able to work.

Lynne, who has been divorced twice, said she didn't save enough for retirement when she was younger because she wasn't able to.

"Early on, the idea of RRSPs and that kind of thing, it just wasn't out there very much," she said.

"We struggled for years just to survive."

While McDonald did contribute to a pension at one of his previous jobs, that money had to be used in the late 1980s when a recession hit and wiped out all of his savings.
"The money had to be used. It was gone. You couldn't recover," he said.

The issue of how retirees in Alberta will support themselves is becoming critical, according to the Alberta Federation of Labour (AFL). It points out in its 2009 report, The Looming Crisis in Retirement Incomes, that Albertans have the lowest retirement savings in Canada, partly due to inadequate pension plans.

According to the AFL, pension coverage has been in decline since the 1990s and only 33 per cent of workers in Alberta are covered by a Registered Pension Plan (RPP).

And with a large number of baby boomers approaching retirement age, the AFL says there could be a serious rise in poverty rates among senior citizens.

But Dr. Norah Keating, a professor at the University of Alberta's Department of Human Ecology, doesn't agree.
"One of the big policy successes that Canada has is that we have an income security system for older adults that has actually reduced the rate of poverty and it's gone down consistently over the last 30 to 40 years," Keating said last week.

"There's good news here. We have an old age security pension, which is a universal pension for older adults and then the Canada Pension, which people who have been in the labour force can get after retirement," said Keating.
"At a national level, looming crisis in terms of retirement income, I don't see it."

Keating does point out that the recent recession has had an impact on retirement incomes, especially for those who were already retired when the recession hit.

"People who have investments that they're counting on to augment their retirement incomes often have lost a huge amount of equity in that downturn in the market," she said.
"They have no way to recoup lost equity. For them, if they need to live off dividends and interest off the investment, many of them saw their incomes go down substantially."

The Alberta government has also taken note of the issue of more seniors working into their retirement years.

One of the policy directions included in its Aging Policy Framework, released last fall, says Albertans who choose to continue working in their senior years must be adequately supported. Specifically, it calls for age-friendly employment policies and practices, as well as resources for employers who oversee a multigenerational workforce.

Keating says seniors who continue to work past retirement and also those who wish to re-enter the workforce do face challenges.

"It can be very difficult, primarily because of your age," she said.

"It is a barrier in some cases if you need a lot of physical stamina to do a job, but in many cases, it's not a matter of age but experience and problem-solving skills."
With longer life expectancies pushing the age of retirement up past 65, Keating said people increasingly will be retired for as long as they were in the workforce.

"You could easily be retired for 30 years, it's a really long time to have to organize your finances and think about how far they have to stretch," she said.

"As we move past this assumption that people are retired at age 65, we'll probably see more flexibility, more people in the labour force as they get older."

St. Albert Gazette, Sat Feb 5 2011

AFL calls on government to revive CPP proposal, as poll proves it's what Albertans want With Ted Morton no longer in cabinet, it's time for the Alberta government to listen to its own citizens on pension reform and reverse its opposition to increasing Canada Pension Plan (CPP) benefits.

A new poll shows that two out of three Albertans want the government to work with other provinces to increasing CPP benefits and 77 per cent believe CPP benefit increases should be the top priority for improving retirement security for all Canadians.

"It is clear that the Alberta government is not doing what Albertans want," says Gil McGowan, president of the Alberta Federation of Labour (AFL), which represents 140,000 workers. "Former Finance Minister Morton led the opposition to increasing CPP benefits. He pressured Canada's other finance ministers into opting for a private pooled pension plan that will benefit banks and other finance industry professionals more than it will help Canadians," he says.

"Now that Morton is no longer Finance Minister and is no longer in cabinet, the Alberta government should revert to its earlier position, where it recognized the need for pension reform and understood that increasing CPP benefits could be part of the solution. Canada's finance ministers meet again in June. It's not too late for real pension reform. We must not miss this historic opportunity."

The poll was conducted by Environics Research Group for the Canadian Union of Public Employees. It surveyed 1,012 Albertans between January 20 and January 31, with an error margin of +/- 3.1 per cent, 19 times out of 20. It showed that only 32 per cent of Albertans agree with their provincial government's opposition to increasing CPP benefits and that 56 per cent believe the federal and provincial governments are moving too slow in making changes to Canada's pension system. A total of 59 per cent of Albertans with an opinion are against the decision to delay CPP benefit increases in favour of the proposed private pooled pension plan.

"The Alberta government has a real opportunity to listen to its people. With Morton no longer pushing the cabinet to the extreme right, the government can withdraw its opposition to increasing CPP benefits and work with the rest of the country to improve retirement security for all Canadians," says McGowan.

"It was Morton's ideological opposition to government involvement and his unbending faith in the free market that led him to push for the private-industry option. The economic collapse on 2008, led by the poorly regulated global financial investment industry, has proved beyond a shadow of a doubt that the market must not be allowed to decide something as important as this."

Nanton News, Sat Feb 05 2011

With Ted Morton no longer in cabinet, it's time for the Alberta government to listen to its own citizens on pension reform and reverse its opposition to increasing Canada Pension Plan (CPP) benefits.

A new poll shows that two out of three Albertans want the government to work with other provinces to increasing CPP benefits and 77 per cent believe CPP benefit increases should be the top priority for improving retirement security for all Canadians.

"It is clear that the Alberta government is not doing what Albertans want," says Gil McGowan, president of the Alberta Federation of Labour (AFL), which represents 140,000 workers. "Former Finance Minister Morton led the opposition to increasing CPP benefits. He pressured Canada's other finance ministers into opting for a private pooled pension plan that will benefit banks and other finance industry professionals more than it will help Canadians," he says.

"Now that Morton is no longer Finance Minister and is no longer in cabinet, the Alberta government should revert to its earlier position, where it recognized the need for pension reform and understood that increasing CPP benefits could be part of the solution. Canada's finance ministers meet again in June. It's not too late for real pension reform. We must not miss this historic opportunity."

The poll was conducted by Environics Research Group for the Canadian Union of Public Employees. It surveyed 1,012 Albertans between January 20 and January 31, with an error margin of +/- 3.1 per cent, 19 times out of 20. It showed that only 32 per cent of Albertans agree with their provincial government's opposition to increasing CPP benefits and that 56 per cent believe the federal and provincial governments are moving too slow in making changes to Canada's pension system. A total of 59 per cent of Albertans with an opinion are against the decision to delay CPP benefit increases in favour of the proposed private pooled pension plan.

"The Alberta government has a real opportunity to listen to its people. With Morton no longer pushing the cabinet to the extreme right, the government can withdraw its opposition to increasing CPP benefits and work with the rest of the country to improve retirement security for all Canadians," says McGowan.

"It was Morton's ideological opposition to government involvement and his unbending faith in the free market that led him to push for the private-industry option. The economic collapse on 2008, led by the poorly regulated global financial investment industry, has proved beyond a shadow of a doubt that the market must not be allowed to decide something as important as this."

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Media Contact:

Gil McGowan, President, Alberta Federation of Labour @ cell 780-218-9888 or office 780-483-3021

For more on the poll, go to www.cupe.ca. For more on pension reform, go to www.realpensionreform.org.

The new report from the Alberta Superintendent of Pensions shows 37 pension plans were discontinued in the province for the year ending June 30, 2010, affecting 6,847 people.

For the same period in 2007-08, there were 30 private pension plans discontinued, affecting only 582 people.

Last year, slightly more than half of affected members had their pensions merged with another plan. In most of the other cases, members didn't lose their funds (which could be transferred to locked-in accounts), but companies stopped offering pensions for various reasons, according to the provincial government.

Dennis Gartner, superintendent of pensions and an assistant deputy minister for Alberta Finance, declined to comment on his new report.

Department spokesman Bart Johnson said the growing number of discontinued plans is a symptom of the economic downturn, and that private pension plans are solid vehicles worth pursuing.

"The private-sector solution is working," Johnson said.

"There are uncommon instances where you get companies that run into bankruptcy or (other situations). But, by and large, people in pension plans are well protected by the standards that we have in place."

In the 2009-10 period, thousands of people lost their Alberta employer pension plans for a number of reasons, including: bankruptcy, dissolved companies, financial or administrative considerations, a switch to group RRSPs, or "other" reasons.

For example, 1,321 members from four plans last year had their pensions discontinued because of companies dissolving, compared to none in 2007-08. Five plans were replaced by group RRSPs, affecting 316 people, compared to 132 people a few years ago.

Furthermore, 204 members last year had their plans discontinued for financial-administrative reasons, versus only three people in 2007-08.

Another 990 people (in 11 different plans) lost their pensions for reasons simply listed as "other."

"It's a trend that's showing up almost everywhere," said Norma Nielson, a business professor at the University of Calgary specializing in risk management. "The riskiness of the pension plans is going to follow the ups and downs of the economy."

Employer pension plans have disappeared because companies struggled during the downturn, Nielson said, while firms on more stable footing are moving away from pensions because of the high costs of offering them.

As the province's population has grown, so has the overall number of members in Alberta pension plans. The latest reporting period saw 234,290 pension plan members, up nine per cent in two years.

Provincial Finance Minister Ted Morton has been advocating for Canada to adopt a private-sector voluntary pension plan as governments look to bolster retirement savings for Canadians.

He strongly opposes the push by labour groups and other provinces for an enriched public Canada Pension Plan.

It is estimated six in 10 Canadian workers in the private sector have no private pension plan.

Morton, along with his federal and provincial counterparts, agreed in December to create a private-sector pension vehicle to boost retirement savings. The Pooled Registered Pension Plans (PRPP) are targeted at small and medium-sized businesses, and the self-employed who don't have a workplace pension option.

"The across-the-board CPP hike is kind of a shotgun approach," Morton said Wednesday, calling CPP a payroll tax that will stifle job creation. "We feel what is required is a targeted solution."

Morton said the pooled pension option will provide more stability compared to individual private plans because a large number of people will invest in it.

Liberal Leader David Swann strongly disagrees, saying a modest increase in CPP contributions would dramatically improve retirement income for Albertans.

"If we don't solve this now, it will just become a bigger problem in the future," Swann said. "It's a much more cost-effective approach for the majority of Albertans."

The new report also shows more Albertans are falling on hard times and needing to tap retirement savings.

The number of people facing "financial hardship" - and forced to apply to the superintendent to access emergency funds from locked-in accounts - has more than doubled from boom times to 2,433 in the latest period.

Also, the amount of money released nearly tripled to $24.7 million from 2007-08.

The largest number of applications for emergency dollars were due to low income (1,483 cases), according to the latest report, while 107 applications were for mortgage foreclosure and 77 for rental eviction.

"The trends are clear and they're ominous," said Gil McGowan, president of the Alberta Federation of Labour, which supports increasing CPP contributions.

McGowan said the latest numbers prove the provincial and federal governments' plans for a private-sector option is short-sighted because many Canadians are losing their pensions.

"If nothing is done to address these trends, then I think more and more Canadians - perhaps millions - will face poverty in retirement," he added

Calgary Herald, Thurs Jan 20 2011
Byline: Jason Fekete

The recent meeting of government finance ministers at Kananaskis took an important first step toward improving Canada's pension and retirement landscape. But there is tougher slogging ahead.

Facing at least four proposals to shore up Canadians' savings for retirement, the federal government's Jim Flaherty announced it would proceed first with defined-contribution pooled registered pension plans, aimed at providing pensions to small-business employees and the self-employed currently without any company pension.

Another proposal, to expand the Canada Pension Plan, has been moved to the back burner and may simmer there for some time while government deficits continue, according to new federal minister of state for finance, Ted Menzies of Calgary.

Any reform of pensions in the country revolves around a number of issues -- whose retirement income is it targeted to improve, who will manage it, who takes the investment risk, and will participation by employers and employees be mandatory or voluntary?

The proposed PRPP would be aimed at the 67 per cent of the labour force without corporate pensions. It would be administrated by regulated financial institutions, including trust and insurance companies, which naturally drew praise from the Canadian Bankers Association. As for participation, jurisdictions would determine if it's mandatory for employers, and it would likely be voluntary for employees.

For those who do join, the defined-contribution nature is a compromise -- employees would get an automatic 100-per-cent return through employer matching of contributions, but employees would have to take on the investment risk, with no fixed pension benefits.

"Reading between the lines, it would be portable and go across industry lines. Both of these aspects would be an improvement," said Russ Purdy, a retired labour-relations consultant in Edmonton. "The absence of a mandatory employer contribution will get a 'thumbs down' from the union movement and the NDP, of course."

Certainly many unions, including the Alberta Federation of Labour in a meeting with The Edmonton Journal editorial board, want pension reform to be universal and include their members. They also want the government to manage the plan and take the investment risk, with participation by employers to be mandatory. They want the so-called "CPP on steroids," where taxpayers take all the investment risk and employee benefits are guaranteed.

There are two obvious arguments against universality. One is that employees who already have a generous defined-benefit corporate pension shouldn't have an enhanced defined-benefit government plan at taxpayer peril. The second is that corporations, if forced to pay more into CPP than they already are, could reduce contributions to or eliminate their defined-benefit company pensions.

With small businesses, the question is whether they can afford to contribute to a corporate pension plan or a supplemental or beefed-up government plan of any sort, in addition to current CPP contributions. The price might be cutting jobs.

With the PRPPs, employee participation is another issue.

"I think the biggest problem will be the voluntary nature of the scheme," Purdy said. "There's a certain portion of Canadians who don't take advantage of the current voluntary schemes and adding yet another one doesn't seem to be particularly helpful, if these are indeed the people we are supposed to be helping."

In fact, just 55 per cent of Canadians have registered retirement savings plans, and only five per cent of all RRSP contribution room was used up as of 2008, when the average annual contribution was $2,700, according to last available data.

The PRPPs are a good start, aimed at the people who are most in need of savings for retirement. The next step is to increase the portion of their retirement income that is guaranteed, which continues to shrink as defined-benefit pensions disappear and low interest rates scare people with RRSPs from converting to life annuities. That can be done by having corporations or the government or insurance companies take on investment risk and by making saving compulsory.

Bob Baldwin, of the Institute for Research on Public Policy, noted that finance ministers will have to consider trade-offs, "such as those between respecting individual preferences and implementing broad-based instruments, achieving certainty of benefits versus certainty of contributions, and ensuring income adequacy versus plan affordability."

None of those decisions are easy.

One somewhat radical idea that has been floated involves a combination of a super-sized CPP plus corporate defined-contribution plans.

Under this scenario, everyone would belong to a giant CPP, run by the government with investment risk taken by taxpayers, with contributions by employers and employees increased from current levels, and defined benefits enhanced.

At the same time, corporate defined-benefit pensions would be eliminated and companies would instead offer scaled-down, defined-contribution pensions run by financial institutions, again with employer contribution-matching and with employees taking the investment risk. Participation would be mandatory for companies and voluntary for employees.

I, and my teenage sons, could live with that.

Edmonton Journal, Fri Jan 14 2011
Byline: Ray Turchansky