Government’s pension moves eroding support: CARP

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This article was published by the Global News on January 31st 2012.  To see this article and other related articles on the Global News website, please click here.

TORONTO – The group that represents retired Canadians says the Conservatives are in danger of losing support over its plans to tinker with pensions.

CARP says its membership usually votes strongly Conservative. But a membership poll conducted Friday, in the wake of Prime Minister Harper’s speech in Davos, Switzerland outlining plans to make the retirement system “more sustainable,” showed a drop of 10 per centage points in support for the government.

“This is a political game changer,” Susan Eng, CARP’s head of advocacy said. “It is meaningful. It is something people are looking at.”

Eng notes that most of CARP’s members are retired, so they know changes being contemplated won’t affect them. But it will affect their children and grandchildren – and they’re not pleased about that.

“They’re vehemently opposed,” she said. “They are opposed to the idea of this being introduced without being debated in a general election.”

The federal government has suggested that Old Age Security, which is paid to all resident Canadians when they reach 65, is unsustainable because of a rapidly aging population. By 2030, it will take two workers to support every retired person in the country. It’s currently around 4.5 workers for each retired person.

The federal government has projected that the cost of providing OAS would rise from $36 billion to $108 billion by 2030, if nothing is done.

“If the government is about to launch this attack on old age security I think they will find a very angry population,” Ralph Goodale, Liberal MP for Regina-Wascana said.

Ian Lee, an assistant professor of Strategic Management and International Business at Carleton Univesity’s Sprott School of Business, says raising the age of eiligibility for OAS won’t save a lot of money – but it does get a very important conversation going.

“The real issue is universality,” Lee said. “Only five per cent of Canadian seniors live below the poverty line. If we’re trying to produce greater equity and save money, the solution is to move to targeted old age pensions.”

“Should we be paying old age pensions to people who do not need them – retired medical doctors, retired university professors?”

Meanwhile, in the House of Commons, the Conservatives used their majority to limit debate on legislation that would create Pooled Retirement Pension Plans (PRPPs).

Government house leader Peter Van Loan said the government campaigned on the need for PRPPs in the last election and there is “enthusiastic support” for the plans.

The plans give employers and workers another option to set aside retirement savings – in effect a group RRSP.

However opposition MPs have used the debate to pound the Harper government over its vague hints at more fundamental reforms to a pillar of the current pension system – Old Age Security, which supplements the Canada Pension Plan for millions of modest-income
Canadians.

The Conservative majority has voted to limit to two days the debate on second reading of the pooled pension bill.

Eng says she’s far from enthusiastic about pooled plans.

“PRPPs are just barely better than nothing. In abolsutre terms they are going to be nothing better than group RRSPs. And if people are not using up their RRSP room as it is, what makes you think they’re going to do this more?”

According to Statistics Canada, Canadians use up only about seven per cent of their available RRSP contribution room.

-With files from Canadian Press