Thank you for inviting me to participate on this panel on a key issue for all workers whether they are in a union or not in a union – and that is their ability to retire in dignity after a lifetime of work.
I want to start by challenging the claim that Canadians are doing relatively well at saving for retirement.
In fact, there is more and more evidence that we have a very serious problem of inadequate retirement savings in this country. This past July, Dr. Keith Horner estimated that half of Canadians born between 1945 and 1970 and earning between $35,000 and $80,000 are facing at least a 25% drop in their post-retirement standard of living.
Just this week, the Canadian Payroll Association released survey results that showed 40% of Canadians expect to retire later than they originally planned because they haven’t been able to save enough.
How did we get to this point?
The basic problem is that two of the three “pillars” of Canada’s retirement income system are failing: workplace pensions, and private retirement savings.
Not so long ago, Canadians had an explicit agreement with employers: Canada’s universal, public earnings-related pension plan, the Canada and Quebec pension plans, would be limited to replacing only 25% of workers’ pre-retirement income, on the understanding that employers would provide secure, adequate workplace pensions for employees.
Today, 12 million Canadians – two-thirds of all workers, and three-quarters of workers in the private sector – have no workplace pension plan, and the number is dropping.
Employers that once offered defined-benefit plans are abandoning them as fast as they can, while keeping them for their CEOs and senior executives.