Monday, February 22, 2010

Goodale Weekly Report: Senior Pension Crisis

This Grit is back from European vacation... to find life pretty much the same around here... (we can learn a thing - or three - from the Europeans)...

Well... I guess there are the Olympics... That's new.

Ralph's Weekly Report makes some good points about pensions and the potential crisis facing us (unless some more progressive policy comes to the forefront - and soon):


Did you know that one-third of Canadians have no retirement savings, beyond the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS)?

Another one-third don’t have sufficient savings to maintain their standard of living.

Over half of Canadian families do not belong to any employer-sponsored pension plan, and for those with a company plan, what happens if your employer goes bankrupt?

These are serious concerns. Liberals have called for three remedial steps to be taken immediately.

First, if your employer goes bankrupt, your pension is “stranded” and must be “locked in” to annuities. But annuities are not managed for growth and the “locking in” often takes place at the bottom of the market (when bankruptcies typically occur).

Liberals propose to bolster the value of stranded pensions by giving Canadians the option of transferring their assets to the CPP (with its impressive security and growth record).

Secondly, we need to help the most vulnerable pensioners – those on long-term disability. If your employer is paying you these benefits directly, but goes bankrupt, you’ll be left with nothing. Liberals propose that long-term disability benefits be given “preferred” status over other claims in bankruptcy proceedings.

Third, we need to help Canadians save more, by offering safe, reliable and hassle-free ways to invest for retirement. Some of this can be achieved through tax and administrative changes to promote greater up-take on RRSPs and other private savings vehicles.

But that’s not all.

Supported by several provincial governments (including Saskatchewan), Liberals are calling for a “Supplementary Canada Pension Plan”, to allow all Canadians to voluntarily contribute more of their own money to the CPP, and thus benefit more from the CPP’s high-grade investment performance.

Stephen Harper’s government promised to make fixing pensions a leading priority, but to date they’ve accomplished nothing at all.

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