Headlines about seniors in Canada tend to focus on the negative – a “grey tsunami,” “rising health care costs,” “sustainability of pensions,” and so on.
Yet, seniors in Canada are more vital and active than at any time in our history. The most important issue for seniors is independence. This covers a range of policy issues.
On public transit, we know we need to enhance public transportation to meet seniors’ needs. It becomes a key aspect of on-going independence and health to be able to access key services by bus or rail.
We need to look at how most effectively to maintain the ability of seniors to live at home for as long as they choose and to ensure that there are good options available when they choose to move out. Further, we cannot continue to ignore the suffering of well-informed adults who wish to make a choice to die with dignity in their own country. We need an honest, inclusive, national discussion about our aging population. Perhaps most urgent is national pension reform. We cannot afford to keep on stalling.
Canada’s 14th place ranking in the 2014 Global Retirement Index is certainly a good sign. Even better, Canada’s ranks 8th in the Finances in Retirement sub-index. However, these impressive numbers belie the precariousness of the situation. What our high standing does not reflect is that the safety net that has allowed this current generation of retirees to live out the rest of their lives with dignity and security is being quietly undermined. If we do not reform the system, this could be the last generation of retirees with stable pensions.
It used to be that retirees could depend upon a three legged stool: the Canada Pension Plan (CPP), the Old Age Security Pension (OAS), and workplace pension. Workplace pensions were the first to go. Only 24% of the current private sector labour force contributes to employer based pension plans. The younger generation simply does not have the option. Thankfully, the public sector still has solid pensions. To solve this inequity, the Harper strategy has been to claw back public sector benefits until equality is reached — that is, equality at the bottom..
Though we are certainly experiencing a demographic shift in Canada as boomers age, there is no basis for the cries of the doomsayers who would have the Canadian workforce moving from the labour market to hospital beds in one fell swoop. The story that Canada will experience catastrophic labour shortages and have no one left to support public pension plans is not supported by evidence. (At the same time, we are somehow experiencing an epidemic of youth unemployment.) The evidence suggests that our economy need not collapse in one arthritic gasp. In fact, we can assume that the GDP will continue to grow, buoyed by immigration (not temporary workers) and by less labour intensive economic activity. For a Prime Minister who has suggested that his legacy could be “re-orienting economic immigration,” we would expect these solutions to be obvious. In this possibility for a newly invigorated economy, retirees need not be seen simply as an economic drain.
The best bet for ensuring that retirees continue to live in security and dignity is an enhanced CPP. If our three legged stool is missing a leg, we need to bolster the strongest leg. A robust CPP is the most sustainable and reliable option to keep seniors out of poverty and to allow them to retain their purchasing power as they age. In a nation with a savings problem, the enhancement of the CPP which is essentially a required savings plan, only makes sense.
At Davos 2012, the Prime Minister surprised the country (and his caucus) with the announcement of changes to access to old age security. Without consultation or a word in the 2011 election, the 2012 budget raised the age at which Canadians qualify for OAS to 67. This was not the reform that Canada needed. Experience shows that a good percentage of people over 65 are not able to keep working due to health issues.
At the annual December 2013 meeting of Federal, Provincial and Territorial Ministers of Finance, most provinces, led by PEI, were preparing to move ahead with assessing a series of phased in proposals to enhance the CPP, which over some 40 years, would increase the maximum CPP payable beyond the current 25% of the national industrial wage. Under consideration was an increase in the Years Maximum Pensionable Earnings (YMPE, which is equivalent to the average industrial wage) subject to CPP contributions from $52,500 in 2014 to something closer to international standards, which would be close to $110,000. (For comparison, the USA’s Social Security System assesses premiums of 12.4% on incomes up to $117,000.) In addition to increasing the YMPE, the co-operating provinces were considering an increase in the income replacement ratio of 25% of the YMPE to something more reasonable like 35% or 40%.
This newfound cooperation among the provinces was met with a blunt rejection by the federal government. Provinces are now looking at ways to fill the void that the federal Conservatives have opened. The Ontario government, for example, has seen the necessity to go it alone with plans to develop an Ontario Retirement Security Plan. Inconceivably, Harper has been trying to stand in the way of this, too. The best option for seniors and for the Canadian economy is a national, public, shared program with defined benefits without restrictions on labour mobility. That said, if the Harper Conservatives will not help seniors maintain independence, the least they can do is not interfere.
Originally printed in the Hill Times.