Pensions - part 2

Quote "Really hard to get an answer to that one. Back in the early 80s folks would have been all over it, pointing to the absence of womens' rights in the current pensions dilemma.  That does not seem to stir interest any more, for some reason."

You got that right, as Canadians are carrying a torch across the country that says women just aren't good enough for the Olympics as hatred is now something to celebrate as women pick up the flame that discrimanates against them leaving us all in shame.

I believe I did above, when I talked about increasing the GIS.  Also, G. Pie confuses regular CPP with CPP Disability, which is notoriously bureaucratic.

With employers having much shorter lifespans and tighter margins, I respectfully disagree with Magog45's preference: I just don't think it's even realistic to try and rely on employers to organize proper pensions savings for their employees.

And while I might agree with canuquetoo's investment philosophy, the level of financial literacy it requires is let's be honest beyond much of the population who will most badly need income security in their retirement.

I agree that vehicles which promote personal savings are worth supporting, but the current RRSP regime is just so frikkin' rich at the top, and doesn't do much to help people who paid into company pension plans all their lives (thus losing the RRSP contribution room), and then lose those pensions.

So, again, I favour an enriched GIS (Guaranteed Income Supplement; the income-tested portion of Old Age Security), a move to double CPP insurable earnings, allowing companies to hand over their pension plans to the CPP, and cutting back on RRSP contribution limits at the top-end.  Also, we need to look at the tax treatment of various kinds of retirement income as a way of helping.

Moves like this will give the CPP Investment Board a lot more funds to invest.  They lost a bit during the downturn, and while it would be extremely dangerous to intervene too much in directing their investment mandates, we'll need to think carefully about who we hire to manage that money, how much we put under active management versus the safer traditional vehicles, what else we use it for if anything, and what incentives we're prepared to support for the money managers and which ones we aren't.

Last October, this thread started out under the heading  "Pensions - the Conservatives next wedge issue." 

Lo and behold, a front page story on the Globe front page  today says "Ottawa targets public service pension plan for cutbacks. Tories consider dropping warly retirement provisions as they review civil servants' plan in attempt to control ballooning deficit.

"The generous pension plan enjoyed by federal civil servants is being targeted for possible cuts, including an end to early-retirement provisions for new hires, federal documents and sources say. Newly released documents show that a group of deputy ministers has been taking a hard look at the federal pension plan, with concerns that fewer and fewer private-sector plans offer the same type of benefits...

"Any major change to the Public Service Superannuation Act, however, will be stiffly opposed by unions, which are trying to contain the growing criticism of their members' plans in an era of dwindling private-sector pensions."

And so it goes.

Let's hope our Bay Street stooges in Ottawa and Queen's Parks lose lotsa voter support in future elections before the neoliberal baloney does finally collapse around their ears.

Well in the US recently, there is this: Krugman vs. Hudson on Samuelson

Hudson said recently that the people who were there in Bush I and Clinton administrations had a free hand in 1990's Russia. Those crooks are still there embedded in Obama's entourage and will do to America what they did to Russia with their Russian and European friends during the perestroika years, which is to pauperize the country. The current wealth and income gaps between rich and poor in America will become chasmic.

In Canada? Nothing. Whether we have Tories or Liberals or both at the helm as now, we get nothing worthwhile mentioning for the next ten years. Some are saying that over next ten years, there will be a revolution in economic theory. As it was in the 1930's, Asia bustles and surges ahead while the west is mired in economic stagnation. We already have a situation with liquid war in Central Asia and Middle East. The crooks and liars and crooked-liars may try to start a big war as a way out of  current economic crises of their own doing.

The Krugman bit is interesting, abnormal, because he tells us (in effect) how we got here...with our pensions and everything else:

'Actually, there was a time when many people thought that institutional economics, which was very much focused on historical context, the complexity of human behavior, and all that, would be the wave of the future. So why didn't that happen? Why did the model-builders, led by Samuelson, take over instead?

"The answer, in a word, was the Great Depression.

Faced with the Depression, institutional economics turned out to have very little to offer, except to say that it was a complex phenomenon with deep historical roots, and surely there was no easy answer. Meanwhile, model-oriented economists turned quickly to Keynes-who was very much a builder of little models. And what they said was, "This is a failure of effective demand. You can cure it by pushing this button." The fiscal expansion of World War II, although not intended as a Keynesian policy, proved them right."

So Samuelson-type economics didn't win because of its power to cloud men's minds. It won because in the greatest economic crisis in history, it had something useful to say."

In the decades that followed, economists themselves forgot this history; today's equation-mongers, for the most part, have no idea how much they owe to the Keynesian revolution. But in terms of shaping economics, it was the Depression that did it. "

Some "institutionalist" appeared again in the year Samuelson won his Nobel, to try to create economic models in which zero growth economies worked. Krugman does not explain this, and I cannot recall him explaining how his discipline proposes to end growth on a finite planet. Maybe, like Keynes, when asked "but what about in the long run", replied, "in the long run we are dead".

Fidel's right, we have to return to institutional thinking...but of course here the institution under consideration is pensions. I think it has to be melded with environmental considerations...just as some of us wanted in the 1970s.

I think what you're trying to say is, where will the money come from to properly fund public pensions? 

There was a time in the 1930's when Canadian seniors were living in poverty. The CCF demanded that Tory, then Liberal governments help out Canadian citizens whose working lives had come to an end, but were still citizens of this country nonetheless. I think it was Mackenzie King who told the CCF that there was no money, and asked CCF members if they thought money grew on trees? Meanwhile the CCF were prodding the Liberals to nationalise the Bank of Canada, and which unlike the US Federal Reserve of banks, is still nationalised today.

The second world war broke out, and CCFer MJ Coldwell later wrote about it that, suddenly, there was all kinds of money to fund Canada's war effort. The Liberals suddenly realized that money does grow on trees when they have the political will to make it happen. This was just one example of the history of feigned political impotence in Ottawa. The impotence is entirely self-imposed when it comes to Canada's two old line parties, Liberals and Tories alike.

George, I have some economic news for you. Everyone who does not work is supported by someone who works - whether that someone is in their home or just some taxpayer or employee or whatever. If we don't tackle retirement security for those who work, you can swiftly forget about security for those who don't. Sorry for finally responding to your litany, but I just thought that some basic economics might be in order. And I could be all wrong and washed up, because I never studied the stuff. Maybe money grows on trees planted on Parliament Hill or something.

No, it has to be dependent on settlement of the problem of pensions for the employed, who are the ones who create the disposable wealth for everyone in the society.

This is about pensions - deferred earnings. Pensions for workers are not government subsidies. They consist of wealth created by workers and set aside for the future, plus other money created by workers and appropriated by their employers, and set aside for the future. You want to talk about poverty and unemployment, there are no doubt other threads where that might be appropriate. Here, it just diverts from and confuses the issue.

Invest in a mirror. Pensions are a real issue, yet your focus seems to be on guaranteed income supplements - which have nothing to do with pensions.

Happy New Year, George.

More than in passing; Jack's raised the need to hike the OAS and GIS several times in QP.  The pension position he outlined has several components:

 * increasing the GIS to close in the poverty gap amongst seniors
 * phasing in a doubling of CPP/QPP benefits, paid for with an additional payroll deduction of 2.5% (which he calls less than the administration fees alone on many RRSPs)
 * a national system of workplace pension insurance, funded by employer pension plans
 * a public facility that could "adopt" orphaned pension plans, managed by the CPP Investment Board

There's also the Nortel Bill, introduced by Wayne Marston, that seeks to amend the Bankruptcy legislation to give pension plan members higher priority at the time of insolvancy.  This bill has been very warmly received by the group of former Nortel employees, who were brought together for consultations with the NDP Caucus by Paul Dewar.

This covers most of the aspects George Victor, Unionist and others have been talking about: both short-term, medium-term and long-term measures to address income security, improved pension coverage, and improved protection for existing pension plan members.

well, i noticed my earlier remarks in the predecessor thread were a collation of thoughts at the time- very confusing to read.  but it was necessary to write that way because of that busy time of year- no time to track conversations and write up appropriate comments to each thread.

i still have a lot of limitations, but will comment here on pensions.  and put those comments in the context of other articles on pensions and how to pay for them.

So,

- The Basic problem is the Basic Pension, which is public Old Age Security (OAS), supplemented by the Guaranteed Income Supplement (GIS).  Monica Townsend in her article at the CCPA on the subject clarified the insufficient levels of these supports.  Providing only a maximum of around fourteen thousand dollars a year, the basic public pension leaves seniors below the Low Income Cut Off level, that is, in poverty.   She stated that the amounts need to be raised and probably every progressive person agrees.  (One of her concluding points was that the pension should be indexed to wages, but these days the 'jobs' which exist are increasingly low wage and part-time-no-benefits jobs, so maybe pensions can be indexed to a combination formula of wages/prices- whichever is greater, prices being defined as the cost of living.)

  I'm glad the NDP is proposing to raise the basic pension level so that neither women nor men have to live in poverty.

- CPP is external employment-based pension funding, and is now incredibly tied up with horrific profiteering weapons production, mining, and other out-of-control financial players.  For the purpose of the present comments, I'm going to focus on where to get money for OAS and GIS, because they are still funded fully by the public purse.

- Armine Yalnizian made a comment in her article/talk regarding the accomplishments of the CCF (the transcript is posted at www.policyalternatives.ca) which was very helpful.  She said that public funds could be created as credit using as collateral the National Wealth of Canada which is not the GDP but is the value of our collectively-owned assets.  

- The Bank of Canada could create this credit, based upon the collateral of our collectively-owned assets.

- What are our collectively-owned assets?  These could be considered in current terms, or they could be considered in non-dollarized terms.  Marilyn Waring earlier wrote in her book "If Women Counted" that assigning dollar values to assets isn't the only way to do accounting.  Accounting can use numbers to tally eg. the number of litres of water still in our streams, the parts per million of carbon dioxide in the air (with a negative sign in front), the number of acres of unroaded, unlogged forest, the number of former street people in public housing, the percentage of children getting three meals a day, the number of seniors able to cover their bills, etc.

- Further in Armine Yalnizian's talk, she mentioned a National Investment Board as a means to coordinate the process, which could conceivably function to invest not in horrific destructive corporate behaviour but in our fully public assets - common waters, air, original forests, our neighbourhoods. The National Investment Board would need to be fully democratized and serve, rather than dictate, the priorities of neighbourhoods.

- as a ps. the only elements of Armine's talk i didn't agree with were regarding progressive movements - there are indeed many progressive movements, more than ever, though they are not visible in what have in the past been considered norms of activism. 

- so those are a few pense-ions.

the other part of Armine's talk i had been thinking about was her concern over the lack of unifying theme for progressives, and this concern was echoed to some degree in Fred Wilson's blog regarding 'fragmentation' of movements.

progressive movements are not visible in what in the past have been norms of activism, but it is interesting that at a gathering the other day, where there was a simultaneous/spontaneous art table happening, the predominant pattern drawn was the spiral.  i drew a similar pattern on the (very few) cards sent to some distant people a week or so ago.

in ancient days, as eg. on Ukrainian easter eggs of course traced back to indigenous/prehistoric culture there and on all continents, the spiral was a symbol of energy and of spirit.  of movement.  building

it is a symbol that expresses hope for spirit and energy, particularly in the months of winter and early spring.

it is a symbol of spirit tied fundamentally to the earth, of an expected and hoped-for rising of life in spring, but also in expectation the quiet sorting through and pulling together of elements within and between people and their environment..

the spiral pulls together spirit in love, a word which is probably another lost word, but is not hate, is at the core of our ground as human beings

that spiralling is happening at the grassroots in profound ways, and between people of all political persuasions.  sometimes we get caught up in the differences, but those get discussed and worked through, and the spiral continues, pulling together.  what amazes me most is when people of different persuasions get together and listen to one another, something in each is also seeking common ground, something becomes common ground, something already was common ground, and is common ground -the earth on which they exist and a spirit of life which they possess, of 'love', in however 'small' a measure or buried at times.

that spirit exists and for some odd reason cannot be wiped out.  it seems to persist despite death and sorrow.  it continues to spiral and build. 

like the waves gathering in the storm,

I realize this is mostly a discussion about the CPP but if I can be permitted a bit of drift, there is an article in the latest Anglican Journal (sent to all parishioners across the country) about their need to cut member pensions a bit due to financial constraints.

excerpt:

"The pension plan changes were necessary to offset asset losses resulting from the financial market crisis. The changes also address the fact that the average age of the 2,000 plan members is increasing and is now 51.9 years. The older the average employee population, the more it costs to provide the pensions earned by the members, said Robinson."

When the church has to cut back on pensions to their own retired members, you know there's a problem. And it likely will get worse as congregations dwindle in size - I live in the diocese of Quebec, and last month there was a front page article in the same Anglican Journal with our bishop suggesting he might be the last bishop of the diocese exactly because of dwindling Anglican congregations in the diocese and inability to pay salaries for clergy and eventually the bishop himself. With fewer active clergy paying into the plan, those already receiving pensions are likely facing further cuts in the future. By the time today's active clergy retire, there probably will be very little left of a church pension for them to receive, and likely they may come to rely on the CPP instead. I cite this example because it may be the same situation for other private pension plans - less people paying into private pension plans as downsizing and outsourcing increase, means more private pension plan cutbacks, as with the Anglican Church plan. I wonder if the solution for everyone is to just give up on private pensions and switch to the CPP, and, to the best of everyone's ability, increase their RRSPs.

Good points, all, George. I was speculating because I'm not really familiar with the specifics of how all these things work. I don't have an RRSP, btw.