Fix CPP, not OAS, to head off a pension crisis
February 21, 2012 | 
Author Published On Mon Feb 20 2012
Thomas Klassen
Toronto Star
The proposal by the federal government to increase the age of eligibility for Old Age Security from age 65 fails to address the problem facing Canadians.
The trouble is not that increases in expenditures for OAS are unsustainable as the baby boomers begin to reach retirement age. Rather it is that Canadians are starting their working lives later than ever, living longer than ever and wish to retire — with lots of money — while in their late 50s or early 60s.
Making clear that this is the predicament shifts the debate from the OAS to the Canada Pension Plan. After all, it is the CPP that provides workers with a significant amount of retirement income.
Making sure that Canadian workers can retire in comfort is possible in only two ways: Require workers to contribute more of their employment income to pension plans, or require workers to stay employed longer. Neither will be popular, but there is no magic bullet.
However, increasing the age of eligibility for OAS from the current 65 will not accomplish either. Workers do not contribute to the OAS, and it is paid to all, not only workers. So increasing its age of eligibility will not increase the retirement security of older Canadians, but rather make it more precarious.
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Disabled woman who made $1.25 per hour axed
 Terri-Lynn Garrie has a developmental disabiliy and went to the Human Rights Tribunal becuse she earned $1.25 an hour or less for 10 years. (JULIE JOCSAK/QMI Agency) |
ST. CATHARINES, ONT. – Terri-Lynn Garrie loved to work, even if she was being paid less than the price of a cup of coffee an hour.
Work gave her a sense of purpose, a schedule to keep and a group of people to talk with every day.
She didn’t know $1.25 an hour was less than the going rate – less than what the other workers at a St. Catharines, Ont., wine bottling company allegedly made, those who didn’t have developmental disabilities.
But $1 to $1.25 an hour is what Garrie, a 43-year-old St. Catharines woman, claimed in a Human Rights Tribunal case she was paid for a decade of full-time work before being fired Oct. 26, 2009.
And that’s what she earned in compensation when local wine-bottling company Janus Joan Inc. was ordered to pay $2,678.50 for lost wages based on her $1.25 a hour.
In May, the Human Rights Tribunal of Ontario also awarded her $15,000 after it found she was discriminated against on the basis of disability when she was terminated.
CBA urges fair and appropriate judicial compensation and benefits
02/20/2012 | Press release
OTTAWA- The Canadian Bar Association (CBA) says that fair and appropriate compensation and benefits for the judiciary are necessary to maintain judicial independence.
“Canadians need to know that when they appear in court, the judge is going to be impartial,” says Trinda L. Ernst, Q.C., of Kentville, NS, in her remarks to the 2012 Judicial Compensation and Benefits Commission. “Individuals must have confidence that when their case is decided, judges have no financial incentive in the outcome. This means not only that judges have no personal or financial interest in the case, but also that they are not worried about whether the outcome of the case will please or displease the government that provides their remuneration.”
Established under the Judges Act, the Judicial Compensation and Benefits Commission makes recommendations to the Minister of Justice on the salaries and benefits of federally appointed judiciary every four years. The law requires the Minister of Justice to respond to the Commission within six months.
The CBA emphasizes the importance of the Commission process for determining judicial compensation. “The Commission, a body that is independent, objective and beholden to neither the judiciary nor the government, is properly placed to determine and recommend fair and appropriate judicial compensation and benefits,” says the CBA submission.
The submission notes a disturbing trend regarding the government’s response time to Commission reports. Responses to both the 2004 and 2008 Commission reports were issued well beyond the statutory timeframe of six months.
“The judicial compensation review process only succeeds if all parties respect and comply with the statutory time requirements. Unexplained delays by one party are disrespectful of the other parties and undermine the integrity of the process,” notes Trinda Ernst.
Trinda Ernst and Peter Browne, Q.C., Chair of the CBA’s Judicial Compensation Committee, will appear before the Commission on Monday, Feb. 20, 2012, at 2:45 p.m. in the Renaissance Room of the Chateau Laurier Hotel. The submission is available on the CBA website.
The CBA is dedicated to improvement in the law, the administration of justice, and support for the rule of law. Some 37,000 lawyers, law teachers, and law students from across Canada are members.
$2M national study on “making it better” for lesbian, gay, bisexual – and straight – youth
Media Release | Feb. 20, 2012
Just how effective school and community programs are in reducing homophobic bullying of lesbian, gay, bisexual and transgender (LGBTQ) – and straight – youth is the focus of a $2-million, five-year study led by Prof. Elizabeth Saewyc at the University of British Columbia.
The study is funded by the Canadian Institutes of Health Research (CIHR). To date, it is the agency’s single largest investment aimed at improving health and school outcomes for sexual minority youth.
“We know from previous research how common stigma and anti-gay bullying is in schools across Canada, and the health problems such violence can lead to,” says Saewyc, professor of nursing and adolescent medicine at UBC’s School of Nursing.
“Schools and communities are using a lot of different strategies to try to change this, but very few of these strategies have been evaluated, to see not only if they work, and how well they work, but why they work,” says Saewyc.
Researchers from 10 universities – representing seven Canadian provinces and several U.S. states – are co-investigators on the study. Their research partners also include ministries of education and health, national teacher and public health associations, school districts, and community programs that work with schools.
The researchers will document and assess the types of strategies that schools are using to foster connectedness and reduce bullying, and track trends in health and safety among youth. The team will also study the experiences of heterosexual teens who are harassed because people assume they are gay.
“Homophobia can affect anyone,” explains Saewyc. “In any high school, there are far more heterosexual teens than lesbian, gay, bisexual or questioning teens, and because of this, we have found half or more of those targeted for anti-gay harassment actually identify as straight.
“There isn’t much research about them, but what there is suggests they have the same health consequences as LGBTQ youth who are bullied.”
Prof. Joy Johnson, Scientific Director of CIHR’s Institute of Gender and Health stresses that it is essential for CIHR to support this kind of research. “We hope the results of this study will lead to measures that will help to make school a positive experience for sexual minority youth in Canada,” she says.
Popular savings plans drive up costs for public pension benefiTS
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Heather Scoffield, The Canadian Press
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OTTAWA
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A popular savings program created by the federal Conservatives is exacerbating the fiscal pressure on public pension benefits – even as the government prepares to scale back benefits.Prime Minister Stephen Harper set up tax-free savings accounts or TFSAs in 2008 to encourage savings, allowing adults to set aside up to $5,000 a year to grow tax-free.
The accounts have surged in popularity, and in the last election, Harper pledged to double the maximum annual amount, once the budget is balanced.The fiscal problem is that when retirees start taking money out of their TFSA plans, none of that income is included in calculating whether they’re eligible for Old Age Security or the Guaranteed Income Supplement.
So there’s a big incentive for working people to save money in TFSAs while knowing they will still qualify for GIS when they retire – even if their income from their TFSA plans is high, says pension expert Keith Horner, a former Finance Department official.He says if everyone who can takes full advantage of the TFSA-GIS trade-off, the costs of the GIS would skyrocket to about 84 per cent above official projections by 2030. Horner acknowledges not everyone will take up the option.But given the tax incentives embedded in the savings plans and the fact private-sector pensions are becoming less prevalent, the take-up on TFSAs is expected to be large, and Horner’s numbers speak to the huge potential cost.
“The GIS is a real issue,” Horner said in an interview.”Governments should take these projected longer-term fiscal consequences of the current TFSA rules into account when assessing pension reform options,” he adds, in a major paper for the Institute for Research on Public Policy.Indeed, the government’s chief actuary has also examined the numbers, and issued similar warnings.In his 2009 assessment of Old Age Security, actuary Jean-Claude Menard found that the TFSA trade-off will cost the federal government an extra $4.2 billion annually by 2050.
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Support for public health care soars
OTTAWA, Nov. 24, 2011 /CNW/ – An overwhelming 94-percent of Canadians support public – not private, for-profit – solutions to making the country’s healthcare system stronger – with an equal number of Conservatives flying the banner for public health care.
A new poll conducted by Nanos Research, released on the eve of National Medicare Week (Nov. 27- Dec. 3), revealed the soaring Canada-wide support, up nearly 10-percent from a similar poll conducted a little over a year ago. Support has risen to a record 94-percent, from a strong showing in August 2010 of 86-percent, underlining that more than nine in ten Canadians support public solutions to making public healthcare stronger.
“There are two issues at play here,” Nik Nanos, President of Nanos Research, noted. “First, healthcare continues to be a top issue of national concern for Canadians. The second point is that right across the board, regardless of political affiliation or other demographics, support for public solutions in health care has increased over the past three years.”
The new poll was commissioned on behalf of the Canadian Health Coalition (CHC) and surveyed 1,202 Canadians between Oct. 20 and 24, 2011. The results are considered accurate within 2.8 percentage points, 19 times out of 20.
The results were good news for the CHC, a national organization that advocates for the protection and expansion of Canada’s public health system, who said the polling results should serve as a loud wake up call to the Harper government.
“Canadians are looking for federal leadership to protect and improve the public health care system,” said Michael McBane, national coordinator of the CHC. “With the 2004 Health Accord up for renewal in 2014, the federal government needs to work with provinces and territories to make healthcare – and a renewed 10-year plan – a top priority.
The current government’s lack of leadership, combined with a history of abdicating its federal healthcare responsibilities along with its penchant for turning its back on enforcing national standards and compliance with the Canada Health Act are all causes for concern,” said McBane.
As a result, the CHC will be carrying its message to 100 parliamentarians on December 1, seeking their support to protect and improve Medicare. As well, the CHC has planned an evening symposium for Nov. 30. Secure the Future of Medicare: A Call to Care will feature keynote speaker Roy Romanow, chair of the Commission on the Future of Health Care in Canada, Andre Picard, senior health reporter and others who will discuss the future of Medicare in Canada.
For further information:Michael McBane, National Coordinator
Canadian Health Coalition
Tel.: (613) 277-6295
www.healthcoalition.ca
Canadian bank regulator warns on pensions market hit
OTTAWA (Reuters) – The solvency of Canadian private pension plans will take a hit by year-end if the current turmoil on financial markets persists, Canada’s banking regulator said on Wednesday.
Julie Dickson, who heads the Office of the Superintendent of Financial Institutions (OSFI), said pension plans that she regulates were 90 percent funded as of June, which she described as “not bad”.
However, equity markets have fallen hard since then, while already low bond yields have retreated further.
“We’ll see what happens at the end of the year. I think that markets are hard to predict, they could bounce back. No one knows where interest rates are going to go, so I wouldn’t write off plans yet,” she told the Senate Standing Committee on Banking, Trade and Commerce.
A pooled pension plan isn’t a pension
By Moshe A. Milevsky | Fri Nov 18 2011
Toronto Star
moneyville.ca
According to the press release on The Department of Finance’s webpage, Minister Ted Menzies said, “If you invest in a PRPP you will benefit from lower investment management costs associated with the large scale of these funds. Essentially, you will be buying in bulk. This will leave you with more cash in your pocket when you retire.”
So this is it? The RPPP raison d’être, was about enabling Canadians to buy their mutual funds for less?
I have a better idea. Why not nudge Canadians to shop at Costco? You can get soy sauce in 950 milliliter jugs, 500 servings of Metamucil in one package, and four-liter containers of my 6 year-old daughter’s favorite chocolate milk syrup. . If the point is for Canadians to have more cash when they retire, I think there are much more effective ways of doing that.
I thought the point of this whole exercise was to increase pension coverage? One should not confuse an investment plan with a pension plan. The former is just a collection of money that moves up (and down) with market-linked instruments. The latter is a guarantee, a promise, a life time of security. Canadians need more longevity insurance and old-age protection, similar to the pensions of public sector employees. (I enjoy one myself, as part of my job at York University.)
I suspect the reasons 60 per cent of Canadians do not have a workplace pension – and risk having less cash when they retire – is not because they are buying their pensions at an expensive convenience store instead of in bulk.
If, in fact, the main objective the Act was to create cheaper and more secure retirements for Canadians, I would have expected to see some reference to investment costs and life-income products in Bill C-25 itself.
The only meaningful economic restrictions placed on the administrators of these plans is that “they must offer investment options of varying degrees of risk and expected return that would allow a reasonable and prudent person to create a portfolio of investments that is appropriate for retirement savings.” This is still accumulation thinking in an environment that needs de-accumulation and income guidance. So you will now be able to select both a large-cap growth fund and a small-cap value fund in your PRPP. Brilliant.
Federal Government introduces Pooled Registered Pension Plans legislation
Following up on the consultation paper it released last December, the federal government introduced Bill C-25: the Pooled Registered Pension Plans Act (Bill C-25) yesterday. Bill C-25 sets out a legal framework for the establishment and administration of pooled registered pension plans (PRPP).
What is a PRPP?
A PRPP is a new type of pension plan, which is being proposed by the federal government to address the current “gap” in Canada’s retirement system. The stated intent of the PRPP is take advantage of economies of scale by providing employers, employees and the self-employed with the option of participating in a “large-scale and low-cost” defined contribution pension plan, and thereby enabling Canadians to save more for their retirement.
Under Bill C-25 employers would not be responsible for the administration of a PRPP. Rather, PRPPs would be administered by an “administrator”, being a holder of a licence issued under Bill C-25 or an entity so designated by the Superintendent of Financial Institutions. While an employer must enter into a contract with an administrator to provide a PRPP to a class or classes of its employees, Bill C-25 clearly states that employers are not liable for the acts or omissions of the administrator.
Who Can Participate in a PRPP?
While the PRPP was originally touted as a cross-Canada solution, the federal government indicated in its press release that “provincial enabling legislation” and changes to tax legislation would still need to be introduced.
Further, Bill C-25 makes it clear that (subject to limited exceptions) it only applies to members of PRPPs who work for federal undertakings or businesses in “included employment”. The Bill does, however, allow the federal government to broaden the scope of PRPPs to other Canadian jurisdictions by entering into bilateral and multilateral agreements with the provinces. Such agreements are stated to have the force of law and to prevail over any provision of Bill C-25 and its regulations to the extent of any inconsistency or conflict.
What is the Process for Establishing/Administering a PRPP?
Bill C-25 is a “stand alone” Act, in that it sets out a detailed regime specifically for the establishment and administration of PRPPs. A number of the provisions in Bill C-25 address issues that are also found in other pension standards legislation, including:
- Registration/Plan Amendments: Similar to other federal pension plans, a PRPP must be registered and plan amendments must be filed with the Superintendent, however, the Bill makes it clear that PRPPs are not registered pension plans under the federal Pension Benefits Standards Act (PBSA) or RRSPs under the Income Tax Act (the ITA).
- Minimum Standards: There are minimum standards provisions, including provisions relating to membership, contributions, variable payments, standard of care, locking-in, pre-retirement death benefits, rights to information, termination/wind-up and marriage breakdown.
- Member Investments: The Bill contains a limited form of “safe harbour” provision, which is similar to the one found for registered defined contribution pension plans in the PBSA. It specifies that if members are permitted to make investment choices, they must be offered “investment options of varying degrees of risk and expected return that would allow a reasonable and prudent person to create a portfolio of investments that is appropriate for retirement savings” as well as a default investment option should they fail to make an election. If an administrator meets these requirements (and any further requirements to be prescribed) it will be “deemed to comply”.
- Contributions: Employers need not contribute at all to a PRPP and members may, after notifying the administrator, set their contribution rates at 0%.
- Enforcement and Offences: Directions of the Superintendent against the administrator, employer or other persons may be enforced through a process as if they were an order of the Federal Court. Contravention of Bill C-25 may lead to prosecution and penalties, however, there is an express due diligence defence
Dwight Duncan on CPP Enhancement
Dear CARP Members:
Retirement planning has always been a source of stress on the family budget and recent economic uncertainty has increased this concern. Many Ontarians experienced declines in their registered retirement savings plans and pension plans have seen investment losses — even those with a diverse set of investments.
Canada has one of the world’s strongest retirement income systems, offering many different vehicles for saving. We can be proud of the fact that the rate of seniors’ poverty has seen a significant decline over the past few decades and is now among the lowest in the world. To further strengthen Canada’s retirement income system for Ontarians, the McGuinty Government has launched a comprehensive plan that consists of three key elements:
- reforming Ontario’s employment pension system, balancing the interests of employee pension plan members, pensioners and plan sponsors;
- protecting employee members and pensioners by responding to the impacts of economic uncertainty on employment pensions; and
- strengthening Canada’s retirement income system by supporting a modest, phased-in, fully funded enhancement to the Canada Pension Plan (CPP), as well as exploring innovative ideas (e.g.. Pooled Registered Pension Plans and Target Benefits) to improve employment pension coverage in a cost-effective manner.
Current tax and pension rules state that pension plans can only be offered where an employment relationship exists, which limits the retirement savings options available to the self-employed. Smaller firms often cannot or do not provide a pension or retirement savings option to their employees due to the relatively high costs of administration. The Pooled Registered Pension Plan (PRPP) option could expand the range of institutions that can set up pension plans, and the range of people who can access them. Large pools of capital could reduce costs and help improve investment returns.
We support, in principle, the federal government’s PRPP proposal, and are reviewing whether the new federal PRPP legislation meets the needs of Ontarians. However, this type of pension innovation is only one complementary tool to help Canadians save more for retirement. We believe that there have to be modest enhancements to the CPP over time as part of a broader reform to improve retirement income security.
The CPP is secure, efficient, portable and sustainable. A fully-funded, modest enhancement would provide a significant benefit to workers when they retire, and strike a balance between the need for more predictable retirement incomes and additional costs for businesses and individuals. I look forward to continuing this discussion with the federal government and other provinces and territories at this year’s upcoming Finance Ministers’ Meeting.
Sincerely,
Dwight Duncan
Deputy Premier
Minister of Finance
