As a student, a pension can seem miles away. But the current federal plan for our retirement will leave the planning pretty much up to us. Canada’s emerging pension crisis will leave many retiring below their means if the federal government doesn’t make some changes soon.
The recession saw many Canadians unemployed or returning to school. Stock market crashes depleted savings and once secure workplace pensions crumbled. The Globe and Mail reported on Oct. 17 that 44 per cent of Canadian workers – nearly 8 million – do not have an RRSP or employer plan. The public Canadian Pension Plan is a means of avoiding abject poverty – not of sustaining a meaningful standard of living. Canada has also begun to invest this money internationally, leaving it more volatile and in the hands of global markets.
Canada’s over-confidence in its system should not threaten our futures. In response to whether they will shift to accommodate the nation’s changing landscape, the CPP Investment Board said on its website: “…we have adjusted our short-term tactics in light of crucial changes in the markets.” But the effects of the recession will be long-term.
Canada’s aging population could not afford the hit to their savings. The federal budget will be stretched with added health care costs and with paying out its own substantial public service pensions. The majority of government employees are guaranteed payouts upon retirement. In 2005, National Union Research reported a shocking divide of 26 per cent of workers with plans in the private sector, versus 84 per cent in the public.
In a May press release, Canadian public policy think-tank C.D. Howe called for a major overhaul of the system: a new supplementary pension plan for all Canadians. The proposed plan would enforce mandatory and investment features that would protect citizens long-term.
For the number of us not saving, a shift in our mentality and structure of the system is necessary. The government cannot continue to pretend that things are as they were before the recession. Despite the prime minister’s consistent self-congratulation Canada has suffered major losses in the past year. Let’s plan towards a future that acknowledges that.