I think it’s fair to say that retirement security is top of mind for the majority of Canadians. And politicians are listening: it was constructive to see all the major parties coming up with measures to deal with the issue during the most recent election campaign.
In my last editorial, I summarized the various election platforms and pressed the point that Canada’s workforces, and workplaces, are evolving. Federal and provincial governments must come to terms with this reality, and with how demographics and longevity are affecting when, and how, Canadians are retiring, alongside changes to employment standards and laws.
In its annual comparison of 37 global retirement systems, Mercer recently ranked Canada in ninth place, one spot better than last year. But Mercer also noted certain common challenges facing all pension systems, whether in the Netherlands, which was top in this year’s ranking, or in Thailand, which ranked the lowest. As life expectancy improves — positive news, to be sure — so do the pressures on our public resources to support the health of older citizens. Throw in Canada’s declining access to workplace pension plans and turbulent conditions for long-term investing — and the future isn’t looking great.
In this month’s Our Take, the authors of two discussion papers from the Ottawa Council on Aging’s expert panel on income security, question Canada’s current age of eligibility. According to Statistics Canada, some 36.3 per cent of people aged 65 to 69 will still be in the workforce in 2024. If Canada continues to pay pension benefits at age 65, the authors note, many seniors will be working full time and earning at lifetime highs, while also receiving a pension.
Will our new government consider a system that aligns the age at which pensions begin to be paid with the actual age at which people leave the workforce? Could savings from old-age security benefits and the guaranteed income supplement be allocated to raise the minimum income guarantee for the elderly? For the Canada Pension Plan and workplace pensions, could savings be translated into lower pre-retirement contributions or higher benefits starting at a later age?
In the context of the trend towards delayed retirement, these are important questions. And these papers attempt to answer them, while also suggesting that a comprehensive review and consultation of the whole retirement system is in order.
I have no doubt Justin Trudeau’s Liberals will continue to focus on enhancing the CPP and Canadians’ retirement security, but the cyclical nature of any election system means that moving backwards instead of forwards on these issues is still a real possibility.
In one of the discussion papers mentioned earlier, pension consultant Bob Baldwin argues for the review of Canada’s regulatory regime and tax rules to facilitate innovative pension plan designs. We’re seeing movement there, for sure, but with the component parts of our retirement income system constantly changing, he suggests the system is viewed as a policy file that’s always open.
Governments come and go. That’s how democracy works. But certain issues are universal. Whether they voted for the Liberals, the Conservatives, the New Democrats or the Green Party, every Canadian has the right to retire with confidence, when they’re ready. But until we take a hard, sustainable look at improving our retirement income system — including a better alignment of private pension plans and the public program — that reality is just slipping farther and farther away.
Jennifer Paterson is editor of Benefits Canada.
Editor’s note: The graph on page 33 of the October issue reversed the labels of the HOOPP’s liability hedge and return seeking portfolios