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Document raises questions about Harper retirement policies
Finance Canada review of Canada’s retirement system says Canada scores poorly among OECD countries
Canada scores poorly among developed countries in providing public pensions to seniors, according to an internal analysis of retirement income by the federal government.
And voluntary tax-free savings accounts or TFSAs, introduced by the Harper Conservatives in 2009, are so far unproven as a retirement solution and are largely geared to the wealthy.
Those are some highlights of a broad review of Canada’s retirement income system ordered by the Privy Council Office and completed in March this year by the Finance Department, with input from several other departments.
The research, compiled in a 30-page presentation deck, was created as the government came under fire from opposition parties, some provinces and retiree groups for declining to improve Canada Pension Plan or CPP payouts through higher mandatory contributions from workers and businesses.
The CPP issue has already become acrimonious in the federal election campaign, with Conservative Leader Stephen Harper saying on Aug. 11 that he is “delighted” to be making it more difficult for Ontario to launch its own version of an improved CPP. The federal Liberals are hoping to use Harper’s clash with Ontario Liberal Premier Kathleen Wynne over pensions to win seniors’ votes in the province and beyond.
A heavily censored copy of the internal document was obtained by CBC News under the Access to Information Act.
The review acknowledges that Canada trails most developed countries in providing public pensions, and is poised to perform even worse in future.
Low among OECD countries
“In 2010, Canada spent 5.0 per cent of GDP on public pensions (OAS/GIS and C/QPP), which is low compared with the OECD (Organization for Economic Co-operation and Development) of average of 9.4 per cent,” it noted.
“The OECD projects that public expenditure on pensions in Canada will only increase to 6.3 per cent of GDP by 2050 – much lower than the 11.6 per cent of GDP projected for OECD countries on average.”
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Younger workers more likely to see less income in retirement, CIBC says Average person born in ’80s and after may see only 70% of pre-retirement income, economist Benjamin Tal says
Average person born in ’80s and after may see only 70% of pre-retirement income, economist Benjamin Tal says
Urgent attention needs to be given to what Canadians can expect to get in retirement income — something that’s become a real divide along generational lines, a prominent Canadian economist says.
In a note to clients this week, Benjamin Tal at CIBC waded into the ongoing debate over Canada’s looming pension and retirement crisis.
While falling well short of endorsing any of the myriad proposals out there to fix the problem, including beefing up the Canada Pension Plan, encouraging more individual savings by expanding RRSPs and TFSAs or something else, Tal is unequivocal in his view that declining retirement income is a problem needing a solution — and soon.
After running a simulation of pension income across a wide variety of age ranges, Tal found a clear deliniation between those in retirement now or approaching it, and those who won’t get there for several years or decades.
In today’s economy, few people rely on any one source of retirement income, with most people drawing on a combination of their own investments such as RRSPs, TFSAs and real estate, government programs such as CPP and things like pension plans that they may have accrued from employers over a lifetime of work.
In general, Tal says, “the typical 70-year-old today has enough income to maintain his or her pre-retirement standard of living, taking into account the typical drop in expenses in one’s post-working years.”
Generational gap
But while millions of Canadians 65 and up are on a path to the retirement of their dreams, the data show that millions of others are headed for a steep decline in living standards in the decades ahead, particularly people who are younger and are in middle-income brackets.
…click on the above link to read the rest of the article…
