April 2010: We reached out to a variety of politicians and invite them to inform our readers of their views on pension reform by drafting a position statement for publication. Here are the answers we received:
Over the course of the last year, pension and retirement income issues have increasingly become a subject of public discussion. The pension and retirement income concerns are important to Ontarians and across the country.
Canada’s retirement-income system is one of shared responsibilities. Federal and provincial governments both play key regulatory roles – the provinces by setting minimum standards for most workplace pensions; the federal government through tax and bankruptcy rules, savings plans such as RRSPs and TFSAs, and income supports such as the Guaranteed Income Supplement and Old Age Security. And both levels of government serve as joint stewards of the Canadian Pension Plan.
Employers and unions also have responsibilities – to ensure pension promises are realistic, affordable, and properly funded. Important too, is the responsibility of individuals – whether young or retired – to save wisely and adequately for the future.
From these shared responsibilities flows a shared challenge: as our population ages, as our economic landscape shifts, we must work together to ensure the continued health of our retirement-income system.
Our system is currently facing significant challenges. Workplace pension laws are out-of-date. Individual savings rates have dropped. Pension coverage is uneven and declining. The global recession has led to plan underfunding and uncertainty about retirement income for many current and future retirees, just as it has strained retirement-income systems around the world. And research has indicated that a significant minority of Canadians – particularly middle-income Canadians – may not be saving enough to maintain their current standards of living upon retirement.
At the same time, we should not forget our system’s strengths. The CPP is on sound footing, in sharp contrast to U.S. Social Security. Poverty among the elderly has been drastically reduced over the past few decades – a Canadian social policy achievement that too often goes unnoticed. And while the recession’s impact on retirement savings should not be downplayed, we should also recall that most savings arrangements have long time horizons, and the true impact will not be known for some time.
We must approach reforms with a sense of urgency but not panic. Governments must move forward steadily and consistently. We need informed public debate, thorough consultation, and sound evidence.
For policymakers, there is no shortage of work to be done.
Ontario was the first province in Canada to introduce minimum standards legislation for pensions in 1963. However, our laws have seen no major reforms in over 20 years. To address this problem, in 2006 the McGuinty government appointed former York University president Harry Arthurs to head an Expert Commission on Pensions.
The Commission received hundreds of submissions and produced 142 recommendations. In December 2009, Ontario introduced its first major legislative response to the Commission. The proposals would modernize Ontario’s pension rules and support a transforming economy by clarifying the benefits of plan members affected by layoffs and corporate restructurings, facilitating pension portability, increasing transparency for active and retired members, and improving regulatory oversight.