To the Editor:
Many middle-class Canadians worry about not having enough income to feel secure when they retire. More than two-thirds of those in the workforce today have no pension plan through their place of employment. So they will have to rely on what they can save privately to augment the basic amounts available to them from Canada's pension system.
The Harper government has made the retirement income challenge that much tougher by breaking two solemn promises made during the election campaign that brought them to power in 2006.
With respect to public pensions, Mr. Harper promised never to reduce Canada's Old Age Security system. As for private savings, he pledged to maintain Income Trusts as a good way to earn and save extra investment income. But were lies.
Mr. Harper is tightening eligibility for both the old age pension and the Guaranteed Income Supplement. To qualify seniors will have to wait two extra years, until they're 67 years of age. That change will take $30,000 from the pockets of those living on the lowest incomes. And by killing Income Trusts, Mr. Harper slashed the savings accounts of about 2-million middle-aged and middle-income Canadians by about $25-billion.
Having punched such big holes in Canada's retirement income system, the Conservatives then conjured up a couple of limited offsetting measures to try to deflect criticism. But they help only a small fraction of the population. For example, "Income Splitting" as a way to reduce the tax burden on elderly couples is a nice idea, but only 15% of seniors are actually eligible, and when one spouse dies, the survivor reverts to a higher tax bracket.
Another example is new legislation allowing "Pooled Registered Pension Plans" to be run privately. Experience in other countries shows such plans are prone to high administrative fees and feeble returns on investment. That's why there has been so much attention lately on how to strengthen the Canada Pension Plan (CPP).
Fifteen years ago, the CPP was in financial trouble. It wasn't sustainable over the long-term. People were rightly concerned that it might not be there when they needed it. So led by Paul Martin, the federal and provincial Finance Ministers of that day worked together to fix it. Contribution rates were increased. Administration was improved. Investment management was placed in the hands of a highly qualified independent board.
As a result, the CPP today is sound and solid for at least 75 years into the future. It has strong management, modest administrative costs and industry-leading returns on investment. But it has one serious limitation - the maximum pension it can provide (based on the premiums it collects) is just over $12,000 per year. That's simply not enough.
So a majority of provincial governments and a great many analysts and organizations are now making the case that it's time to move (gradually but progressively) toward a bigger and stronger Canada Pension Plan - building on CPP's exceptional track-record of success over the past 15 years.
The only significant impediment standing in the way is the Harper government.
Independent assessments show that CPP enhancements can be accomplished without negative impacts on economic growth or job creation, and within the confines of strong fiscal responsibility.
By failing to act, Mr. Harper is once again betraying middle-class Canada.
Ralph Goodale, MP, Wascana, SK.
