August 17th 2009
Further to the previous blog on CARP, vice president advocacy Susan Eng has released CARP’s pre-budget submission to the Standiing Committee on Finance. The general heading of the submission is “Pension Reform: The Status Quo is not an Option.”
It calls for “urgent” reform of all four pillars of Canada’s retirement system. This includes the public pension benefits: both the Canada Pension Plan and Old Age Security, including the Guaranteed Income Supplement to OAS; to workplace pensions through a Universal Pension Plan for those currently without employer-sponsored pensions; and finally a fourth pillar it calls “Support for Family Caregivers.”
In the preamble, CARP warns Canadians are not saving enough for their own retirements and that even those with workplace pensions are at risk in the current economic climate. As noted last time, the fate of Nortel pensioners reveals the fact “the existing pension regulatory regime … fails to protect pensioners when their employers face insolvency” and the failure of such “guaranteed” pensions means that group finds common cause with those without such pensions, or whose pensions are primarily their RRSPs, many of which have “evaporated” in the 2008 market crash.
Increasingly, CARP is concerned about the widening gap between pension security between those in the public sector and those in the private sector. While 85% of public sector workers have an employer pension only 26.4% in the private sector do, which Eng describes as a “dramatic inequity.” It also says 90% of private pension savings are held by only 31% of family units (who have $100,000 or more in savings.)
Nearly 30% of families have no retirement savings, while 45% of singles have no such savings.
Pillars One and Two: Increased Public Pensions
CARP notes the combined maximum CPP/QPP and OAS topped up by GIS is about $19,000 at age 65 but the average CPP/QPP benefit received is just half the maximum. Thus, the typical individual retiree relying only on public pensions receives just $16,000 a year. Those without CPPP get a maximum $13,636 from OAS and the GIS. CARP is recommending that OAS and GIS benefits be “substantially increased,” that GIS clawbacks for casual earnings be removed and that the Allowance be made available based on income regardless of marital status.
Pillar Three: Reform of Workplace Pensions and a Universal Pension Plan for those without employer pensions.
As noted in Saturday’s column, three provincial pension review panels (BC/Alberta, Nova Scotia and Ontario) have issued recommendations for pension reform. All acknowledge the need to rebalance interests of employers and retirees and the need for broader access to larger well-managed pensions for those with no employer pensions. CARP continues to recommend a Universal Pension Plan (UPP) modelled on the CPP, with mandatory enrolment, using the existing payroll deduction mechanism. It’s calling for the federal and provincial governments to convene a Pension Summit to begin the process.
Pillar Four: Support for Family Caregivers
Citing the World Bank and the 2002 Romanow report, CARP views home care services as “the next essential service.” Aging populations and hospital downsizing means heavier reliance on family and friends to fill the gaps in home care service. CARP cites a 2008 Statistics Candaa report that found 2.7 million Canadians age 45 or over provided some unpaid care to seniors 65 or over. It recommends a National Family Caregiver Strategy that would provide caregivers with financial support, workplace protection and integration with the formal health care system.