Changes will hurt pensioners

By Admin Thursday February 02 2012 in Editorial
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If you are in your fifties and female, you may have cause for concern as you approach the next decade in what would become your retirement years. Women traditionally live longer than men and earn less over their lifetime, leaving them more dependent on government-issued pensions.


In a few weeks, the Stephen Harper government, in its annual budget, is expected to expand on Harper’s recent comments in Davos, Switzerland regarding Canada’s aging population and changes to the country’s Old Age Security (OAS) system.


The word is already out that the government is looking at moving the pension eligibility age to 67, up from the current 65, although those receiving their pension – or close to doing so – will not be affected.


At the recent world leaders’ confab in Switzerland, Harper said the CPP (Canadian Pension Plan to which all working Canadians and their employers contribute) is “fully funded, actuarially sound and does not need to be changed.” But he also said that “for those elements of the system that are not funded, we will make the changes necessary to ensure sustainability for the next generation, while not affecting current recipients.”


He was referring the OAS – the old age pension.


According to the National Post, “government documents project the cost of the OAS system would climb from $36.5-billion in 2010 to $48-billion in 2015. By 2030, when the senior population is expected to reach 9.3 million from our current 4.7 million, the cost of the program could reach $108-billion.”


But just last month, Post columnist Diane Frances noted that unfunded pension liabilities amount to $227-billion which – if factored into the aggregate of public debt, including provincial debt – places Canada’s debt-to-GDP ratio at 89.1 per cent, which is almost as bad as Britain’s public debt and pension payment problem at 90.8 per cent debt-to-GDP ratio. And they’ve had riots there over this issue.


It was on this very issue of protecting pensions that late New Democratic Party leader Jack Layton rejected the Conservative budget that led to the last federal election.


But a solution has to be found because, while we face a growing number of retirees, we have a decreasing working population that cannot possibly fund the pension of retirees at the current rate. Where we had five working persons for every retiree in the past, we are headed toward a ratio of two working to one retired.


The government will have to either increase immigration numbers to recapture the worker-to-retiree ratio, cut spending in other programs (health care, education, social programs, the military?) to offset the bigger share that will have to go to OAS or increase payments to maintain the current level as it is indexed annually.


Perhaps all of the above.


Any suggestion of lowering payments would lead to serious push back from the group of Canadians who are most represented at the polls – those heading to retirement and those already there. In fact, we are already seeing signs of this.


If the government goes ahead with any plan to reduce, restrict or otherwise negatively impact the OAS, it would, no doubt, find itself in a righteous battle. There are too many who truly depend on it.


Liberal governments have been able to get away with similar conservative tactics in the past, such as the Paul Martin era of belt-tightening to pay down the deficit. But with a populace already suspicious of Harper’s brand of conservatism, any attempt at modifying social programs, regardless of the urgency, will have to be handled carefully.


The lingering bitterness in Ontario, almost a decade on, toward the Mike Harris government’s ‘Commonsense Revolution’ should give the Prime Minister pause. Is this a battle he really wants to wage? Is this a hill he is prepared to die on? (Politically speaking, of course.)


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