A theoretical pension plan covering Alberta and B.C. is little more than a gleam in a bureaucrat’s eye, but already it’s doing its work.
The mere possibility of the Western provinces having this audacity has echoed like a shot in Ottawa and has even frightened the finance minister of Nova Scotia.
The plan, the theory, isn’t for Western provinces to opt out of the Canadian Pension Plan, but to supplement it. Right now, about 93 per cent of Canadian workers are contributing to the CPP. But after a lifetime of work and contributions, the most any of us will get from our Canada Pension is $9,000 a year.
If relying on CPP is your pension plan . . . well, you don’t have one.
Only a third of working Canadians have an RSP, and most of them aren’t putting aside nearly enough to make a significant impact on their lives after they retire.
In Alberta, only two workers in 10 is covered by a company pension plan. Nationally, that average is six in 10.
And those workers who do have RSPs have watched helplessly as the value of their savings vanished in the last recession. Many of them are too old to wait for that lost value to recover.
So it stands to reason that in a nation where half of workers barely make it from one paycheque to the next, saving for retirement appears to be a goal out of reach.
Enter the Western provinces (and throw in Saskatchewan which has expressed interest in joining). They say that if the feds can’t get their act together and build a national pension plan that will at least cover the cost of macaroni and cheese for seniors, they’ll build a voluntary plan of their own, to top up the CPP.
Naturally, they’re not happy in the Maritimes.
Listen to Graham Steele, the finance minister from Nova Scotia: “What is emerging is the beginning of a Western regional plan, which, depending on how it is done, could be a boost to the economy and increase labour mobility (among Western provinces), not to mention provide more income for people working in Western Canada.”
Your point, Mr. Minister?
“That kind of regional solution to a national issue doesn’t help building the nation.”
Sure, it’s always about nation-building, isn’t it?
The fact is, though, he has a point. It does not serve Canada to build monetary incentives that draw workers into one region. But that doesn’t preclude any province from building pension supplement plans of their own.
But never fear, the feds are already on the file.
Ted Menzies is a junior cabinet minister charged with finding a solution to the low value of the CPP. His department is organizing a federal/provincial meeting next month to discuss ways to make the CPP pay more, without creating too much of a tax burden, that will be acceptable to all provinces. Shouldn’t be too hard.
The worst outcome would see young workers with insecure jobs, having their pay taxed heavier, to cover the pension shortfalls of older workers with high pay and secure jobs, who were too lazy to save for their own retirements. That doesn’t build nations, either.
The goal is to have a pension plan that follows the worker, wherever they move through their career.
Menzies has it right: “We’ve got interprovincial trade barriers, interprovincial labour barriers right now. The last thing we want is a pension that can’t be transferred from one province to another.”
So, fix the CPP. Charge a one-per-cent larger checkoff on wages. Eliminate benefits for retirement before 65. Allow RSP savings until age 75, and eliminate forced annuities altogether.
If not, here’s one Alberta worker who wants the next generation to have at least some kind of job security — inside Alberta. In the absence of an adequate national pension plan, I’d vote for the regional fix.
Greg Neiman is an Advocate editor.