CARP to Finance Ministers in Prince Edward Island: Now is the Time for Action on Pension Reform

June 10, 2010

TORONTO, ON: On the eve of the Finance Ministers’ meeting in PEI, CARP has released an open letter to Canada’s Ministers of Finance urging action on pension reform click here to read the open letter.
The time for discussions has passed, and now is the moment for political leadership and concrete action.

CARP has been at the forefront of the growing consensus that understands that real changes need to be made to the pension system. CARP’s recommendations are based on the concerns of both working and retired Canadians across the country and have been confirmed by numerous experts in the field of pension reform, most recently in a new report from TD Economics click here to read the full report.

“Our members, in particular, are watching for clear political leadership and concrete action. They are waiting for a blueprint for pension reform, not more talk and they want a seat at the policy setting table. The Finance Ministers should heed the expert commentary, including pension industry insiders and economists who agree with public calls for urgent reform”, said Susan Eng, Vice President, Advocacy of CARP.

“CARP members have steadfastly supported a universally accessible supplementary plan that is mandatory and provides adequate defined benefits. Despite early detractors, this model represents the growing consensus among those supporting reform”, added Eng.

CARP will also be polling its members on their willingness to take political action to reinforce their demands in its regular e-newsletter CARP ActionOnline to be issued later today. The results will be available by Monday when the ministers emerge from their weekend meeting and are likely to re-confirm the members’ willingness to act.

“The protracted delays have only served to make Canadians more aware of the need for addressing retirement security concerns and probably more willing to make it count at the ballot box. So further delay is not a good option,” added Eng.

The Open Letter not only calls for immediate action on pension reform, but also reminds the Ministers of Finance of what’s at stake.


Approximately 11 million Canadians, or 60 % of the Canadian work force do not have access to a workplace pension plan, and those who do are less likely now than in the past to belong to dependable defined benefit plans, which can produce 40 percent more in ultimate benefits than defined contribution plans. An estimated one in three Canadians retires without retirement savings today and recent expert research has indicated that from 20% to 33% of Canadians have inadequate retirement savings.

Those with savings but without workplace pensions have their hard-earned savings invested in costly privately managed funds. As the experience of the last two years has shown, these individual retirement savings are particularly vulnerable to market downturns and do not benefit from the advantages of risk sharing and economies of scale of workplace pensions. In 2008, Canadians with privately managed retirement accounts experienced real losses of 21.4 percent, an amount many older working Canadians and retirees will not have the time to recover.

In Canada, income replacement rates are approximately 44 percent of average earnings, well below the 60-70 percent recommended by most experts and the 59 percent across other OECD countries. Savings adequacy is a particular concern for women, who typically earn less over their working lives than men do and have longer expected life spans, both of which contribute to inadequate retirement incomes.

On June 3, 2010, CARP was invited to a roundtable discussion with pension experts chaired by Dwight Duncan, Ontario Minister of Finance, at which Susan Eng, VP of Advocacy, reiterated CARP’s position on pension reform.

Any new pension plan should be universal and affordable, to fill the current gaps in pension accessibility. It should also provide an adequate retirement income with target replacement rates of 60-70 percent, as recommended by most experts. The plan should be sustainable, to withstand economic and demographic challenges. CARP also restated the need for the Old-Age Security and GIS part of the pension system to be increased to allow those who depend entirely on public pensions to meet the costs of daily living and to share in the increased standard of living to which they contributed all their working lives.

CARP and other retiree organizations have called for a new retirement savings vehicle that would provide a universally accessible, affordable saving vehicle that would provide an adequate pension and be robust enough to withstand the kind of turmoil we’ve seen recently. CARP’s proposal for a Universal Pension Plan is attached and may also be found here


There is a silver lining to the delay: there has been time for the media to put a human face on the issue of pension fund deficiencies and the last place standing of pensioners in an bankruptcy. The in-depth reporting in all the major media throughout the past year gave the public a clear understanding of the depth and breadth of the problem.

So not only is there real public pressure for pension reform to re-balance the interests of employers and employees but there is now general realization that 11 million Canadian workers don’t even have pensions to worry about, that one in three Canadian workers retire without any retirement savings. And the thousands people who thought they had safe pensions now see that their retirement dreams may never be realized.

Today’s CARP poll will reach 80,000 opt in subscribers to its e-newsletter, of which 2,000 to 6,000 people regularly participate in the online poll. The poll results will provide input on some of the more crucial issues such as whether political promises for pension reform would sway voters from one party to another. The average age of subscribers to CARP ActionOnline, a bi-weekly e-newsletter, is 69 years of age and 80 percent are retired. This is also the most politically engaged demographic; 70 percent vote regularly and can be considered a bellwether group.


This is the moment to harness the urgency for pension reform coming from all corners of Canada. The meeting of Finance Ministers in PEI this weekend is the time to start the process of constructing a blueprint for pension reform that builds on the wealth of knowledge and experience offered in cross-country consultations. This opportunity to act must be seized, as Canadians cannot afford the status quo. CARP will monitor progress and continue pressing for reform.
CARP is a national, non-partisan, non-profit organization committed to advocating for a New Vision of Aging for Canada, social change that will bring financial security, equitable access to health care and freedom from discrimination. CARP seeks to ensure that the marketplace serves the needs and expectations of our generation and provides value-added benefits, products and services to our members. Through our network of chapters across Canada, CARP is dedicated to building a sense of community and shared values among our members in support of CARP’s mission.