“Save, and save a lot”, Finance Minister says

This article was published by The Canadian Press and several other dailies  on April 1st 2012.  To see this article and other related articles on The Spec website, please  click here.

TORONTO Middle-class families must either save more for their retirement or risk suffering a big shock in their golden years.

The Ontario government plans to repeat that warning over and over again during the coming months as Ottawa raises the eligible age for old age security to 67, postponing existing benefits for two years.

Surveys show few Canadians are saving enough money for their retirement years, which will put more pressure on their families and provincial health and welfare budgets once they reach old age, Ontario Finance Minister Dwight Duncan said.

“I don’t think we are taking this seriously enough as a society,” he said. “I don’t just mean the federal government.”

The federal Conservatives announced in Thursday’s budget that they will start making the adjustments in 2023 and phase them in gradually over six years. That means anyone currently younger than age 54 — including Ontario’s 53-year-old finance minister — will need to reconsider how they’re planning for their retirement — and if they were counting on old age payments at age 65 — how they will resolve that.

It will affect the guaranteed income supplement, veterans’ benefits, aboriginal benefits, survivors’ allowances and especially the way many companies have set up their employees’ pension plans.

Many people don’t realize how expensive their postretirement years may be, or how much of a toll it will take on their own finances to provide care for a loved one. Duncan’s parents paid $4,000 a month to be in a public continuing care facility in the last years of their lives, he said.

“Most Canadians who haven’t gone through this themselves or with family have no idea of the cost of this,” Duncan said.

“This society is getting older. This society is going to live longer. Demands on health care, social welfare are going to become much greater. And this signals a very significant change in postretirement income.”

The federal Tories have pushed the idea of pooled retirement pension plans (PRPPs) as voluntary savings vehicles for workers who don’t have access to conventional pension plans through their jobs, such as the self-employed. PRPPs would essentially be defined-contribution plans managed by large financial institutions, but left-leaning critics complain they’re little more than “glorified RRSPs.”