Workers face Pension Benefit Cutbacks

Record news services reports that the Canadian Commercial Workers Industry Pensiion Plan, Canada's biggest multi-employer plan with 130,000 members, "said in a recent letter to mmembers that companies in Ontario will need to increase their contributions by up to 40 centsan hour per worker by Sept. 1 just to maintain current levels for future benefits."  

Loblaws and affiliated workers have given their bargaining a strong strike mandate."Wayne Hanley, a senior trustee of the plan and president of the United Food and Commercial Workers, also said Thursday that if some employers don't agree to negotiate adequate contributions in new contracts or in special bargaining, the amount of future benefits could quickly plunge by 50 per cent."

The letters from the trustees said "a significant recovery in 2009 hasn't made up for the steep decline in financial markets in the second half of 2008.' Assets have shrunk while liabilities have increased, leaving large unfunded liabilities'."

CCWIPP is a bizarre creation of the United Food and Commercial Workers union. I have serious doubts about the bona fide nature of this creation. I don't really understand the legal status of this plan - perhaps someone can help. I do recall this, however:

Pension trustees hit with record fine: Nine on Canadian Commercial Workers Industry Pension Plan board spent too much of fund's money on questionable Caribbean investments

As I said - strange.

The Ontario Teachers' Pension Plan has bought 5.56 million shares of Transocean Ltd., the Geneva-based company that owned the Deepwater Horizon rig, now on the bottom of the Gulf of Mexico.  Transocean's stock lost nearly half its value after the sinking, but has since recovered somewhat from its lows of about $40 in June, according to the Canadian Press story in the Globe, Aug. 5.  The purchase was made in the May/June quarter.

Teacher's bought a 1.7 per cent stake in Transocean, worth about $297 million.  According to the Globe story, "Teacher's spokeswoman Deborah Allan would not say whether Teacher's is betting on a recovery of the oil driller's share price, adding that the plan doesn't comment on individual transactions. Teachers is the largest single-profession pension plan in Canada, with $96.4 billion in net assets at Dec. 31. It invests the pension fund's assets and administers the pensiions of 289,000 active and retired teachers in Ontario."

Passing through the checkout counters at Zehrs (a Loblaws subsidiary) one can only wish those middle-aged women well as bargaining with Loblaws continues, but they and their customers know that Wal-Mart workers just down the pike, making far less, and with only pitiful benefits, will determine their fate in the increasingly impoverished, post-recession, Darwinian world of service jobs.

I think that the new liberal capitalism of the last 35 years has propped up finance capital over and above the needs of everything else. Too much money is concentrated in speculation and money schemes designed to make money with money. The whole thing has become a Ponzi scheme and diverting money away from education, basic research and innovation. As a result there is a lot of shit to invest in but not much in the way of true wealth creation schemes. Accurate information about the market is a closely guarded secret for those on the inside looking down on the rest of the working class slobs.

What percentage of Canada's male workers are covered by a registered pension plan? - 31.7%, down 11% since 1992, says Mel Hurtig in his book, The Truth About Canada.

Your new "liberal capitalism" did not "prop up" finance capital...it's the other way round, Fidel.  A slowing economy demanded action in the 70s and part of the answer was the extension of credit. Suddenly you didn't need grandmaw co-signing for you on a loan. And of course it also became fashionable for the average Joe and Jane Doe to put some aside for later and along came RRSPs and any number of plans for your Golden years.

Now the companies can no longer afford to guarantee your company pension income, you're only promised some contributions, but in the end, the Market will decide what you get, unless there is diversity in its investments.

Fear not, the Canada Pension Plan Investment Board is busy working for you (if you're working) and has managed to increase your deposits by canny investments in more than equity, realizing gains of 5.1 per cent for the past 10 years only because of its diversity. As explaiined by Rob Carrick in the Globe, the CPP investments are: Stocks, 53.9 per cent of portfolio; bonds, 32 per cent ; real estate, infrastructure assets and "inflation-linked bonds"  14.1 per cent.

What I really don't understand (along with "inflation-linked bonds") is the great silence, the absence of outcry, from workers in private industry/business, regarding the new crapshoot they've been given in pensions.  And I don't know why the purchase of Canadian infrastructure like the 407 Highway is not banned in the name of the kids' future welfare (understanding that infrastructure investments by pension funds like the ONtario Teachers' and CPP should also also be restricted to home ground).  There would have to be agreement across the G20 and GATT to such a move, but, anything to help bring Globalization to a bloody halt, I say...without bringing everything to a halt in the process.

The Globe and Mail reports that a pension conversin from defined benefit to defined contribution back in 1997 is now inthe courts, with some of the employees who bought into the switch charging that "The income projections were 'way out of line with reality,' their lawyer told the court. 

"Some lawyers who specialize in pension cases expect similar fights tocrop up, as employees who have switched to DC plans over the past two decades get closer to retirement and don't like what they see.

Observers say the B.C.case (against Vernon,B.C.-based Tolkd Industries Ltd.) now before a judge in Bancouver, could establish new ground rules for companies trying to sell their employees on a pension-plan switch."  Apparently, the switch is being accepted by fewer employees ...where there is a choice.

Oh. That is simple. The pension plan funds are being used by venture capitalists to sink money into off-shore investments in an effort to litterally chase the industries that have collapsed in Canada due to globalization, and repatriate the profits from exploiting cheap labour in the rest of the world.

Directly nvesting in Ontario, or Canada would sink the investment funds because manufacturing here simply can not compete in the global market, not unless you instituted serious protectionist measures, which is now nearly impossible under GATT.

Nonetheless, there are restrictions regarding how much off-shore investment funds like OTPP can make, and hence a lot is invested in companies like Cadillac Fairview. That said, you simply are not going to be able to finesse globalization by some tricky manouvers with the pension funds, as nice as it sounds to try and confront "globalization" without actually confronting "globalization".

Gosh, even that capitalist rag, The Globe and Mail says in an editorial that if the Chinese government buys Potash Corp. that the review board should nix it. And of course, Canada will have to play the nationalist game someday, just like the others (the U.S. will not let China buy into its resources...our Calgary neo-con really only represents Alberta).

But my concern was for the absence of outcry by the Canadian worker.  Are we talking about a group of people now numbed into submissiion by GATT, so aware of international trade and capital dealings that they have given up?  Surely there is a spark of nationalism somewhere, the United Steelworkers always used to be good for that.  And CAWs birth was an expression of that nationalism.   It's all dead?

No. We are talking about workers who don't actually control their pension funds. As you can see if you actually read the constitutions of the pension funds. Hence, Ontario teachers were left issuing letters to the OTPP fund begging them to show restraint in their negotiations with the CEP at Cadillac Fairvew.

Letters, the board of OTPP was free to ignore.

But I guess, since the Globa and Mail didn't report that (big surprise) it means there is no outcry about it according to the George Victors of the world. But of course, talking about the Ontario teachers opposition to the actions of Cadillac Fairview would mean that the George Victors of the world wouldn't be able to prattle on about how selfish the unions are, on and on and on, on various chat boards, so being smart, the Globe and Mail doesn't report it, and the George Victors of the world get prattle on about "selfish unions" in blissful ignorance.

Poor old Cue.  My prattling is all about the degree to which workers are bound up with the market forces of capitalism, Cue.  Some people recognize that unfortunate situation (a product of the last half century) and others stick their heads in the sand and get by with bullying.

But any union group can effect change in what they are investing in...they just have to set aside individual interests and act as a collective.  But that is sort of a broken reed, right?

No. It's ignorance and misinformation. Not that I think you are consciously promoting misinformation, you are just ignorant, and extremely so. In fact, in the case of the OTPP the teachers unions don't control board of the pension fund. This is not some one share one vote publically traded corporation, but a limited partnership. In the case of OTPP, "the partners" are the Ontario Teachers Federation, and the Ontario Government through the Ministry of Education.

In other words, in the case of OTPP, the OTF doesn't have absolute control over the board, because the Ontario Government is their partner in the fund. Both the OTF and the Ontario Government have three members on the "Partners Committee" that is responsible for determining who is on the board of directors, and the Board of Directors calls the shots on controlling the fund.

In other words, OTF does not really have the power to hire and fire the board if they don't like their decisions, unilaterally, since the government has an equal say in managing the fund. Therefore, the ETFO and the OSSTF don't have the ability to determine the investment strategy, through the OTF, without the consent of the Ministry of Education.

This handy-dandy system for making sure that Ontario teachers money remained under veto control of the forces of neo-liberalism was introduced in 1992 by the ONDP and your friend Bob Rae.

And teachers have been gnashing their teeth in futility against their ethical prison ever since.

What Do Your Pension Plans Invest In?

Are we supporting controversial investment related to our own pension plans? Is there a moral obligation not just to the teachers, but as to what our Canadian government is doing with Canadian Taxpayers money for pension investments?


[15](click on image for larger view)

NEWS: Renegade teachers’ pension fund in Chilean water [16]

The secret to the pension plans is to make sure the investment portfolio is not set to extremes or supports other industries that are counterproductive to the views of a progressive future,  yet can support monies set aside for, and here's the key, for "Funded Liabilities."

No plan should have "Unfunded Liabilities?"

CLC president, Ken Georgetti's letter to the Globe (Sept. 17) brings light to a Globe story the previous day which noted that Canada Pension Plan reform won't meet a fall dealine, "bogged down be details and Alberta opposiont (Alberta wants private pension plans to play a larger role, of course...although CUPE resdient Paul Moist praised Jim Flaherty and Ontario Finance Minister Dwight Duncan "for advocating an increase in CPP benefits, and said Alberta appears to be isolated in its opposition," according the the Globe's Bill Curry. 

Georgetti has also praised Flaherty in the past, but wanted to correct some assumptions in the story: "Your article also says the labour movement wants a gradual doublin of both CPP benefits and premiums. The reality is that a gradual doubling of future CPP benefits can be paid for by a modest increase in contributiions phased in over sevn years...about $3.57 a week (for workers earning more than $47.200 a year. "There's no longer any excuse for putting off improvements to the CPP. Let's get the job done."

Today's Globe carries the story that the CPPIB has bought eight more Canadian malls ($230.5 million) ...including the purchase of the Hillside Centre in Victoria , B.C., from the Ontario Pension Board, the pension plan for some Ontario public employees. The CPP Investment Board invests funds for 17 million contributors and beneficiaries, investing in public and private equities to real estate, infrastructure and fixed-income instruments.

Then there's the Canada Pension Plan's investments.

The Globe's western columnist, Gary Mason, says "Alberta is right to want to have some type of supplementary plan to target that great swath of Canadians who don't have access to an occupational pension program. But it is being short-sighted in its oppositiion to CPP enhancements.

"As it exists, the CPP does not contain the the benefits necessary to meet the needs of many Canadians. The top OECD countries have plans that are almost twice as lucrative. The federal government is right to attempt to remedy the situation and should get on with it, with or without Alberta's blessing," he says, on the basis of Ottawa's "investigating setting up something."   

And there shold also be a supplementary pension program "that could help put many Canadians on the same financial footing as many of their neighbours."

Sure.

And lo and behold, Local 1005 of the United Steelworkers has refused to take U.S.Steel Canada's offer to its 900 workers in Hamilton, and the company has locked them out, just after 7 p.m. Sunday.

"The company's last offer dropped its demand for concessions on vacation time, benefits and cost of living allowances, but held firm on the question of ..."

"Pensions."  The company would no longer offer defined benefits to new employees, only a "defined contribution retirement savings plan," and the company wants to end indexing payments for current retirees."

The union termed the offer "a plan to 'shaft' current retirees and future employees," in the eyes of the bargaining committee, according to The Waterloo Record news services.

Bravo to Local 1005! They'll need lots of support.

I just read a book review  by Rick Perlstein in the current issue of The Nation (Nov. 8) that says that mortgage-backed securities were originally intended as "..a safe way for industrial unions to invest their pension funds...". (p.32)  It goes on to say these securities  "...ended up as the turbocharged vehicle of choice for go-go hot-money investment banks seeking to 'evade geographic and state boundry restrictions on lending,'" (p.32)  Also, that these financial instruments "...emerged, irony of ironies, from the embers of the urban riots of the 1960s ." (p.32)  Any thoughts?

Indeed they do...and they need it now!  Stelco workers' long, sorry saga, from the CCAA debacle, to its sell-off to US Steel, and now in what appears to be its endgame, may yet become the template for more corporate shennanigans in what's left of Canada's shrunken manufacturing sector, and the fate of DBPs generally.

Fortunately there isn't much left of the manufacturing sector. The damage has been done. In that light, we can probably firm up opposition because all that is left is resource and service sector. I can't see Rogers splitting town if we hit them with a 50% tax on their profits. Might have to be more careful with the resource sector, but its not as if they can just pull up stakes and take the nickel and trees with them.

And fortunately the Canada Pension Plan Investment Board is riding to the rescue of all workers toiling in the small businesses of the  private sector who don't have the opportunity to build pensions on which they can actually live. Public sector investments are (almost) good as gold,( now at $1400 an oz.)

The board plans to pay $894 million for 10 per cent of the 407 Express Toll Route from Cintra Infraestructuras of Spain (where cash is badly needed these days), and it hopes to acquire another 30 per cent stake ($3.2 billion) from a proposed takeover of an Australian toll group (formerly Macquarie Infrastructure.)

If successful,the CPP would hold 40 per cent of the 407 shares, seond largest after Cintra.

We'll know in December if other shareholders do not take up their right of first refusal...Intoll and Quebec's SNC-Lavalin Inc.

Won't feel quite so bad paying those toll charges now.   :)

Earlier this fall the CPPPB picked up stakes in two Washington D.C. office buildings, just a few months after acquiring 45 per cent share of two Manhattan skyscrapers.

Omers about that time was putting forward up to $475 million in equity for a redevelopment project on Manhattan's west side.

Lets hope the folks picking up gold do not know something that we don't.

Jim Turk, Canadian Association of University Teachers executive director, told me this morning that he shares my concerns about the mounting deficits of Canadian university pension plans, but it's really up to negotiated settlement at every university. The University of Western Ontario does not share the dilemma of failing markets since it switched to a defined contribution plan, from defined benefit. Even though its fund lost 20 per cent in 2008's collapse, "the school has no obligation to restore it, a model some schools such as Simon Fraser University and McGill University are gradually adopting."  (The Globe does not explain the process, but, generally this means that new employees go on to the defined contribution plan.)

A Globe and Mail survey of Canadian universities disclosed, today, a combined pension-plan deficit of $2.6 billion. Hardest hit is the University of Toronto, where an arbitrator "recently ruled against a proposed premium hike for faculty and librarians,(so) cuts to services are the likely solutions again." Come what may, George Luste, president of the U of T Faculty Association says the deficit there "now is so large that I actually wonder whether the pension plan may not become, basically, the landlord of the university."

As graduate students at the U. of T. in 1975, neither Jim Turk nor I imagined the Canadian working class becoming dependent on the Market, although the shift of political position by that class was already well underway...and now, apparently, we can celebrate its further diminution, making a nationalist position easier, because, as another babbler observes, "fortunately there isn't much left of the manufacturing sector." There's only the service and resource sectors, remaining

But, of course, there is an ascending Conservative Party of Canada that can do a number on service sector workers who - with only a relatively few private sector workers - are still able to count on a solid pension at the end of their working life.

Perhaps the guaranteed pension was only a chimeric belief to be considered only in the halcyon days of the post war period when social goals could be raised...without thought for global implications? But, then, what happened to the parallel visions of social equalilty?

Welcome back, George.

The problem for universities is that the government controls transfer funding to them, and the government regulates tuition for the most part.  So they're not in the same position that a private sector business might be in terms of generating revenues to cover shortfalls.  Taking it out of operating is about all they can do. 

What you see them doing is re-negotiating the pensions so that incoming faculty will be gifted with defined contribution plans, while the old farts get to fade out with defined benefits.

Isn't the expression "old farts" ageist?

If you somehow manage to accumulate the number of years necessary to fit that category, mahmud (and I can't imagine that, given your sad sense of humour) you will recognize it as a self-deprecating and humorous. Making it even more palatable is the fact that retiring university faculty will not be in dire straits, unlike the great majority of the masses.

But keep your pecker and your trolling sensors up. (to work in an old English expression of encouragment).

Are they replacing the "old farts" (as YOU call them) with immigrants too, George Victor? Hmmmm!

Why did I feel safer when replying to a charge of abuse iof elders by calling them old farts ? 

As to your question, I don't know.  But perhaps you are assiduously keeping track of skin colour, country of origin, tendency to avoid stepping on cracks in the sidewalk, etc. ?  Not that I'm accusing you of "racism", mahmud, mind you.  But your preoccupation with race makes you an interesting case.    

Any race-free comments on the current situation facing retirees, their futures, are clearly welcome here.

Keith Ambachtsheer gives a very nice two-page summary of the current state of play in advance of the Finance Ministers' meeting:

http://www.sherylsmolkin.com/wp-content/uploads/2010/11/Pension-Reform-in-Canada-Update-Nov-15_2010.pdf

I disagree that we have to choose horse #1 vs. horse #2 (as he dubs them) but it's still a good summary.

just what this thread needed, ygtbk

That's pretty much the case everywhere, not just in academia.  Defined benefit plans (final salary schemes if you're on the other side of the pond) have pretty much gone the way of the dinosaur.  Pretty much the only defined benefit plans remaining are legacy plans - for all intents and purposes nobody is starting "new" pension plans on anything other than a defined contribution basis (I don't even think there are many cash balance plans around).

Abnormal, we've had this discussion before. You are talking about non-unionized environments, where workers have zero say over their wages and drug plan, never mind what kind of pension plan they do or don't have.

In unionized environments, DB plans are under attack, but to suggest they are being replaced wholesale by DC plans would require what we call, you know: evidence. And I'm not talking about companies emerging from bankruptcy, though even there (like Air Canada, famously), the DB plans carry on.

In Québec, we have centrally-run DB plans by the federation of labour and others which facilitate entry into an existing plan when small workplaces are unionized and where setting up a company plan would be out of the question.

Most importantly, we have a massive campaign by the CLC and other union centrals, supported by the NDP among others, to improve the CPP/QPP and dramatically increase the actual benefit formula for the first time ever (I believe). Most provinces are now on board, though not with the quantum of the increase we are demanding (doubling), to improve from the present 25% of yearly maximum pensionable earnings (which basically tracks the average industrial wage). Some day, the public pension will and must replace private RRPs, and it is available to all, not just the unionized or the lucky.

And, as you well know, the CPP/QPP is and will remain a DB plan.

So rather than going "the way of the dinosaur", DB plans will one day replace the phony made-for-the-gullible-or-those-who-have-no-alternative RRSPs as the vehicle of choice for retirement.

The CPP/QPP is definitely a DB plan. However, even if the benefits were doubled (which may or may not happen) they wouldn't provide sufficient income replacement for many people, depending on income and work history. That's why OAS and GIS, along with RRSP's, are important components of the retirement system as well.

I'm curious why you would characterize RRSP's as phony, though.

Just my personal prejudice. I believe, in the 21st century, any insurance scheme (including retirement insurance) based on individual initiative as opposed to collective savings with some legislative protection is phony - especially when the individual is stacked up against the kinds of financial forces that caused the collapse of 2008. Other than that, RRSPs are nothing but government kindly saying, "if you give the financiers your money to play with now, we'll only tax you on it later when you take it back from them". Nice deal for the financiers, I'd say, with no guarantee that you'll get a penny back.

Unionist, I actually had this discussion the other night with a senior partner at one of the major actuarial consulting firms.  He said the same thing I did.

And as I said, the vast majority of new pension plans are being set up as defined contributions.  With rare exception the only defined benefit plans out there are "legacy" plans.

Even in union environments there is a lot of pressure to convert plans from defined benefit to defined contribution (or at least to put new employees into defined contribution plans).  Like it or not, the economic reality is that too many entities have made promises they can't keep.  And that's not limited to the private sector.  There are municipalities that have declared bankruptcy to get out from under public sector pension liabilities.  [Last article I saw on the topic had San Diego on the verge of bankruptcy.]

How is that a nice deal for the financiers and why do you say there is no guarantee that you'll never get a penny back.  It's up to you what you invest in - buy government bonds if you want to.  Meanwhile you benefit from tax defered investment income.  The alternative is to keep the money and, assuming you want to save it for your retirement, pay tax on current interest income as it's earned.  How is that any less lucrative a deal for the financiers than an RRSP?

Put your first $60,000 into GICs (I think that's still the upper "guaranteed" limit) and then find an ethical invesment(s), along with bonds, wind turbines, and utilities...the places where the big pension funds, including OMERS and Ontario Teachers are placing their bets...people need water, electricity, food (see Woody Tasch's Slow Money: investing as if food, farms, and fertility mattered), etc.  Investing in  food IN THAT WAY,appears an ethical area for investment, utilities, not... just the places where a newly fearful investment industry is trying to avoid the experience of 2008-09.  And ALL pension funds are seeking them out, destroying public utilities in the process. ALL plans depend to a degree on market performance, and the DCs are operated by investment groups, like insurance companies. These people are lobbying like hell as the Cons return public institutions to the private sector.  It was in the mind of America's Dubya where the nation's Social Security was to be turned over to individual investing.

And again, from #24, there seems no way for CAUT to stop this haemorrhaging...and other workers will escape that fate only if the Canadian/world economies return to the robust performance of the post-war's first 50 years. But I don't believe the biosphere would still be livable for our species if that came about.

Absolutely.

Not necessarily - I've seen plans that are totally self-directed.  In addition to the usual selection of mutual funds etc. the employee could purchase any stock or bond they wanted.

As P.T.Barnum said, there's one born every minute.

It may be interesting to see what the CPP is invested in. See page 7 of the linked PDF:

http://www.cppib.ca/files/PDF/CPPIB_ARsummary_2010.pdf

Equities, bonds, real estate, and infrastructure are the categories, counting "other debt" and "inflation-linked bonds" as pretty much bonds.

Could we do that with health care too? Individual freedom sounds so sexy.

Which has what to do with my statement?  Fact is I've seen any number of DC plans that are completely self directed.  Most include a very boring list of mutual funds you can invest in.  But they offer you the option to invest in whatever you want.  They are not managed by investment groups of any sort.  Completely do your own thing. 

No, I get it, I really do. You can make a fortune. Or you can lose your shirt. It's about individual freedom. Equality. It's great. You know, with judicious planning, it could even replace the CPP/QPP, where some faceless bureaucrats invest our money, Lord knows where. I'm emailing the Canadian Labour Congress right away and tell them that instead of doubling CPP/QPP benefits, we should just lobby to scrap it. More money for to completely do our thing with!!!

Unionist, your position appears to be that investment by the Caisse or the CPPIB is a good thing, whereas individual investment is a bad thing. Am I oversimplifying, or is that at least close? Because I think abnormal's point might be that, if you have to manage your investments yourself, a wider choice is better than a narrower choice. I don't think you are necessarily opposed.

Correct. Social tools for insuring retirement security, however fragile and however inevitably bound to our capitalist system, are better than individual ones.

You are bang on, 100%.

Which is why I challenged him - without success, because he didn't respond - to apply his individual choice thesis to health care. Had he replied, I would have moved on in glacier-like fashion to education, road repair, and the water supply.

Quite the contrary - I still rub my eyes when I read his posts on an allegedly progressive discussion board.

Could you possibly say why? It's not obvious.

First you have to tell me what's wrong with this picture:

1. Medicare is abolished for all purposes except catastrophic illness requiring hospital care. On January 1, 2021, that too is abolished.

2. In its place, every Canadian resident (adult and child) is granted $5,000 per year, adjusted annually for inflation - starting now.

3. Everyone is free to spend it, save it, invest it, in any way they please. Total freedom.

Here's some reference data to help you do the math.

It's your move.

Why do I have to answer your question first? Inquiring minds want to know, because it looks a lot like a rhetorical trick

Are you insisting on changing the subject? Because I was talking about the retirement system that we actually have in Canada in 2010, not your hypothetical alternate health system.

And you edited my question somewhat brutally. My actual question was why it's ok for the Caisse or CPPIB to invest, but not an individual. I notice you didn't even attempt to answer that.

No, the subject is whether collective or individual investment is superior to insure people in a modern society against misfortunes of various kinds - poverty in retirement, illness, ignorance, etc.

Do I have to read back your actual question to you? Ok, I will:

You see, ygtbk, notwithstanding what I'm sure is your legendary short-term memory, YOU NEVER ASKED ME WHY it's "ok for the Caisse or CPPIB to invest, but not an individual". You asked me (and here I apologize for repeating yourself), WHETHER THAT WAS MY POSITION, OR CLOSE TO MY POSITION.

In my usual respectful fashion, I replied to the question you really asked, as follows:

And, I answered the question you DIDN'T ask as well, about the Caisse and the CPPIB:

Why are they better? (A question you didn't ask at all.) Because modern humanity recognizes that personal and social health and wellness should not depend on individual inherited or earned wealth or brilliance or luck or conniving thievery and exploitation. Modern humanity has come to the conclusion that those social necessities ought to be guaranteed for all - even if it means that some must pay through the nose, while others pay nothing, and others still pay something in between. And that in the interest of economy of scale and massive savings, all those resources should be pooled and managed by the society.

But, and I repeat, I would have thought that that notion was de rigueur for a progressive discussion board. Indeed, I note with satisfaction that no government in the past half century or so has even dared suggest that maybe we should wind up the CPP/QPP, give the money back to contributors, and let the poor bastards sink or swim.

I'm sure, however, that the Harperite neocons will take comfort from the denizens of "left-wing" discussion fora singing the praises of Individual Initiative over the bloated and incompetent Nanny State.

ETA: In case you don't understand the "massive savings" I referred to above, you can use the simple example of health care, which cost US $4,079 in Canada in 2008, and US $7,538 in the United States - notwithstanding the well-known lack of any insurance whatsoever by over 40 million people at that time. It is obvious to a schoolchild that the same pattern will hold true for retirement security.

Unionist, hilarious! I salute your obfuscation! But I was talking about retirement, not health care, as much as you want to change the subject. So is your position really that Canadians who don't belong to an organized pension plan shouldn't save for their retirement? Because that seems to me to be (excuse the emphasis) REALLY bad advice.

Is your position really that spousal abuse is the right way to go?

Having seen your straw man and raised you one, let me answer your question.

All Canadians and Quebeckers should belong to an organized pension plan.

In fact - they already do - unless they don't work, but that's another set of issues.

It's called the CPP/QPP.

And I, my union, the whole labour movement, the NDP, the Bloc, QS, and many others (including most ministers of finance) are already on record as favouring significant increases in CPP/QPP benefits. We're not all on the same page, but we all agree that collective saving is better than individual gambling.

In addition to that, of course, millions of workers are still lucky enough to belong to defined-benefit pension plans (like CPP/QPP but in addition to them), which truly beat the pantaloons off individual gambling.

In fact, here in Québec, and I'm sure elsewhere, the union federations have established centralized DB plans that small and medium-sized employers and their employees can sign up to with great ease, where it's not that realistic to establish a new plan from scratch.

We need you, and other informed people, to start beating the drums for social and collective guarantees that older folks will be looked after, in a shared way, and not having individuals subject to the luck of their inheritance and the whims of the market.

You were referring there to your straw man. Now that you've heard my views (unasked, because you forgot to ask), you'll agree I'm sure that what I'm saying is REALLY good advice.

And yes, until every individual is looked after, the individuals left hanging should do the best they can for themselves. Obviously if there are tax breaks available (RRSPs), they should take advantage of them. Obviously if the experts tell them to invest in high-yield mutual funds, they should invite the experts to go try out their snake-oil skills on some other sucker. But as people who care about people, we must spend our time and energy changing the world - not debating the size and style of the life-jacket that individuals should pack with them on their next Titanic cruise.

Thanks, Unionist. I was referring to your comments in post #38. Not a straw man, your own comments. But I appreciate your permission to do what makes sense in the world as it is, rather than what you wish it to be. Anyone not part of an employer-sponsored pension plan should be saving for their retirement. I do not promote high-yield mutual funds, I'm more of an ETF guy. To each his own?

That was Dec. 9. I answered you last week. You wanted a different answer? Sorry, even I can't change my mind that fast.

You're welcome. Now maybe we should open a thread advising U.S. residents who have no health care how they should best manage their finances to insure against illness "in the world as it is, rather than" what we wish it to be.

No, ygbtk, never. There's way too much to be done delivering social necessities to all Canadians, to waste time exchanging names of really good financial advisors and investment strategies. I'm sure there are discussion boards where that kind of talk would be welcome. Not here - it's not within our mandate. It doesn't even fit within "babblers helping babblers". Maybe: "babblers helping babblers shed their life savings"...

Unionist, I'm not promoting financial advisors or strategies. I'm doing this for free, and at the cost of considerable abuse. Nonethetheless, I'm willing to bet that at least some babblers don't have occupational pension plans. ETF's have much lower fees than mutual funds, pass it on! And they invest in the same things as the CPPIB and Caisse. So I think it fits squarely into the category of babblers helping babblers. You may disagree.

Do ETFs enjoy the same statutory and regulatory protection that is afforded to RRPs by the Pension Benefit Standards Act and its provincial counterparts, or the protection inherent in the CPP/QPP?

And while I'm asking questions for a change: Do you support the proposal to increase CPP/QPP premiums and double the benefits (which would in effect replicate 50% of the average industrial wage)?

Do you think such an improvement would be of assistance to those babblers (since you mentioned them) that don't have occupational pension plans?

So you're saying that you're not capable of managing your own retirement savings?  That's fine.  But you shouldn't generalize that to everyone else.

And where did I ever make a comment about the CPP/QPP?  All I said was that I've seen a lot of DC plans that are completely self-directed. 

I don't want to gamble my life savings away on a stock market shell game either. It's like they've handed the economy to Al Capone as head political capo and to Mafia financial manager Meyer Lansky as Treasury Secretary, and with the pyramid schemer Carlo Ponzi heading the Federal Reserve and bank robber Clyde Barrow as Attorney General. Needless to say I think EVERY one should be a little apprehensive right now.

I have no problem with the idea of doubling CPP/QPP benefits, although I'd like to see what the new contribution schedule would be before signing on wholeheartedly. However, I think the current proposal is to phase in the enhanced benefits over 35 years or so, which is a long time. It won't be tremendously helpful for people already nearing retirement age.

I also would note that the combined employer/employee contribution rate for CPP/QPP was 3.6% at the inception of the plan, and is now 9.9%, with no increase in benefits. People who retired by the mid-80's (when the contribution rate started going up) got, relatively speaking, a very good deal that those of us still working are still paying for. It could happen again, and this also tempers my enthusiasm.

As for statutory protections, it's clear that an ETF held in an RRSP is not legally equivalent to an RPP. However, for someone who is not covered by an RPP, it appears to be (for most people) the best-possible choice. Depending on his or her income and employment status, a TFSA might be better.

You might want to look at the link I posted above to the CPPIB 2010 report to see how the CPP invests your money.

ygtbk: "I have no problem with the idea of doubling CPP/QPP benefits, although I'd like to see what the new contribution schedule would be before signing on wholeheartedly. However, I think the current proposal is to phase in the enhanced benefits over 35 years or so, which is a long time. It won't be tremendously helpful for people already nearing retirement age."

Exactly why the New Democrats (who tend to be given short shrift hereabouts) proposed immediate increases to payments through the OAS and the auxiliary plan that is aimed at making retirement liveable. These would be increased immediately, while the CPP grew (with its investments in the privatizing world of (now) public utilities.

The solution really lies in a return to a mixed economy and all public investments going into a sovereign fund that is not allowed to invest outside the country...must build jobs.

By the way, you are a stalwart chap, ygtbk, and demonstrate incredible self-control. I try.

George, I've been told I'm trying, too. (* rimshot *)

Here is labour's proposal. It's seven (7) years, not 35 years. Which one you were thinking of?

The one you linked to. You are correct that the contribution increase is proposed to occur over seven (7) years. But the additional benefit depends on how long the worker is paying the increased contribution rate.

Look at the Future CPP benefits examples on page 2. The 28 year old sees an increase of $886 per month in retirement income, assuming retirement at age 65. Not too shabby! The 58 year old only sees an increase of $175 per month, however, assuming retirement at age 65, because he/she is only making the higher contributions for seven years.

It will therefore take quite some time (I think CPP is based on best 35 earnings years) under labour's proposal for the maximum pension to hit 50% of the average industrial wage. In other words, the maximum benefit phases in over that time.

I'm interested in seeing what Flaherty and Duncan will propose next week. They've certainly had enough time to think about it.

Here's more detail on the CLC proposal:

http://www.canadianlabour.ca/sites/default/files/pdfs/Pension-Policy-Pap...

Ask and ye shall be given:

http://www.theglobeandmail.com/news/politics/flaherty-pitches-private-sector-retirement-plan/article1840389/

I'm assuming that Flaherty and Duncan talked about this before formalizing it in a letter, but I could be wrong.

Heh, sounds like Obamacare - get more individuals handing their money over to private investment outfits.

Flaherty, as the article points out, had been favourable to improved CPP/QPP benefits, although I never believed for a minute that he meant it.

I will be surprised - but not shocked - if Duncan backtracks on his previous support for enhanced benefits.

Anyway, the proponents of individual self-managed investment should be pleased. Another blow for individual freedom.

Pooled Registered Pension Plans might be a good thing if their expenses are low enough. I would wait and see before diving in, but if they have decent investment choices charging say 0.5% expense per year, instead of the typical mutual fund expense of 2.5% per year, they could benefit many people. A 2% per year difference compounded for 10, 20, or 30 years makes a huge difference in the amount available at retirement.

CPP expansion might still be on the table, they just might not have Alberta and Quebec on board yet.

I know many people who are working at dead end retail jobs two or three at a time.  What they need is too save for their retirement by becoming sophisticated financial investors?  That is very very nice for people like me who are university educated and might have a dollar or two left at the end of the month after rent and food are paid for.  it does not apply to the majority of our young workforce.  It is a recipe for a very large number of very poor old people in the future.  If it is not public and universal it is not a safety net for anyone except the well off. 

Just heard on CBD Radio 1 that Flaherty is meeting with the provinces at Kananaskis (? spelling) this weekend, and hopes to create a national pool of pension investment capital....din't catch it all, but the Globe tomorrow should have it in depth.

I agree with you. Self directed investments are great if you can afford sound financial advice or fancy yourself as a stock market expert. Today's news about Flaherty's proposal is alarming. We are paying into a universal security system that should not be left to the whims of the market place. There are already plenty of opportunities for those who like to gamble to do so with their money and top up whatever they are entitled to get with their CPP. Why subject everyone else to such speculation?

My highlights in quotes added here and there.

Surprise!

Trick or treat.

Bait and switch.

I guess you all were reading an earlier version of that linked article, without the quote from Duncan now there.

It is only Alberta not "on board". But it is thoroughly good and shafted anyway.

Congratulations.

Thanks for the update, Ken. Yes, the original article must have been screwed up. The CLC in alliance with other mass organizations has been lobbying long and hard for this program. Although none of the provinicial ministers bought into the full fast-track proposal, I was quite sure the majority were on board - including Ontario. That's why I was surprised, as I said. Glad to see it's just Flaherty now (and some clone of his in Alberta).

Today the Globe is pitching it as Ottawa vs. the provinces, with Alberta as the only holdout, just as KenS says.

http://www.theglobeandmail.com/news/politics/provinces-to-push-ottawa-on-cpp-improvements/article1840389/

So we'll likely find out Monday what if anything the finance ministers can agree on. The two proposals are not mutually exclusive - maybe we'll end up with both PRPP's AND an enhanced CPP.

You are deluded ygtbk. Flaherty doesnt need the provinces to do the bait and switch proposal. For the public pension enhancements the provincial ministers need virtual unaminity, and they need the feds. The horse is long gone from the barn.

I agree with Unionist that it is unlikely that Duncan and others were into the fast track proposal, let alone that Flaherty could be pulled along.

But silly me- I thought it looked like we were getting some enhancement. Work on getting the rest later.

You may object to me congratulating you above ygtbk ... since it appears you were favourable to the CPP/QPP enhancements. But even if you are, you and others played a vital supporting role in this shaft by Flaherty.

Track One of the Flaherty Con: build support for the idea of people depending on self directed investments. Doesnt need to be politicians doing this. And there is obvioulsly lots of fertile ground out there for the idea. Including all those people who dont think it is an either/or choice of stronger public pensions versus more "self directed" plans. The mere fact that there are lots of them seeing the merits of the latter is sufficient to isolate support for stronger public pension regimes.

Track Two of the Flaherty Con: given that you've seen that plenty of people will see more dependence on self directed plans as acceptable [you dont care if they think it is not the preferred choice], you know this is where you want to end up. And the best way to blunt the developing consensus for enhanced public pensions is to play along with negotiations for that, and do the bait and switch at the last minute. When the House is recessed, and people are just thinking of the holidays.

Alberta's finance industry (insurance) has said all along that it wants a piece of the action.   No mystery. (good to see someone else exposed to the font of capitalist machinations, the Globe.  Gotta know the enemy.)

The whole finance industry across the country was in on this. And Alberta's government could be counted on to do their part.

Track One by the way is a taxtbook case of 'framing'. Its not that anyone went out there and put the big overt MSM push on the merits of self directed plans. they didnt need to. Just circulate and make sure its picked up.

And none of it done by the Conservatives themselves. Too politicaly risky for them. And they have the handmaidens to do it.

Next up: privatized health care. Choices, options, not mutually exclusive with strong public health care, blah blah.

Even riskier for the Cons, so they will continue staying away from it entirely. And for some while to come. Queue Manning Institute.

KenS, I've been called worse than "deluded". I'm used to it.

However, I believe that I am being fairly realistic. Even if everybody agreed tomorrow that the CLC proposal should be implemented ASAP, it would take a long time for the average CPP payout to approach 50% of the average industrial wage, as I pointed out above.

So, what can be done in the meantime?

If you're already covered by an employment-related defined benefit plan, you're likely in good shape.

If you're in a employment-related defined contribution plan, you should familiarize yourself with the asset choices and pick one - with a reasonable default choice for a lot of people being 60% equities and 40% bonds.

If you have no work-related pension plan, you may need to set up an RRSP or a TFSA. Try to avoid investing in mutual funds with high management expenses. A TFSA may be better for low-income people than an RRSP because any eventual payout will not reduce GIS.

If you think it's unacceptable for me to say any of this, I regret any offence I've caused. But it is NOT a kindness to people to tell them to do nothing if they need to take action. And it is NOT a kindness to tell people to do nothing because the government's going to make it all better, when the available evidence points against it.

If the collective plan is not in place then it is rational to act individually, even if your preferred choice would have been the collective plan.

I'm glad you dont take seriously being called deluded.

But I wasnt referring to the idea that self directed plans can be good for individuals. Of course they can.

I was referring to your thought that the CPP enhancements may be still on the table. Not while this government is around.

And nobody here is telling people to do nothing except wait for the government. We're talking the politics of strengthening public pension plans. And it is indisputable: preaching the merits of self directed plans plays, just played, a role in undermining the strengthening of public pensions. That does not mean you dont encourage people to consider them. But it does mean to be aware of the dual role that has.

And by the way, following what you picked out from the tables.... if I was to get 'only' $175 per month enhanced benefits because there was just 7 years left of my employed life under an enhanced contributions regime- I'd be pleased as punch. Sign me up.

I agree. I wouldn't turn it down either. My point is that we don't get the CPP payout to 50% of the average industrial wage in seven years under the CLC proposal. If you want to do something that's going to benefit people currently close to retirement your best levers are OAS and GIS.

What is currently the maximum benefit that anyone can get under CPP?

I think it's $960 per month - supposed to be 25% of what they used to call the YMPE (yearly maximum pensionable earnings - it rises gently in most years with the CPI), which is supposed to reflect the average industrial wage.

ETA: Of course, I'm only talking CPP - there's also OAS and GIS, depending on eligibility.

I asked because I was doing some comparability to the US.

You cant just read the maximum Social Security in the US. My father nets $1770 per month. The total benefit is higher than that, and then something is taken off for Medicare.

So lets say almost $1800/month in the US, compared to almost $1500/month for max CPP + OAS. Taxation on SS is also convoluted in the US, but even a single person pays next to nothing on that maximum amount. In Canada, I guess you end up paying some provincial income tax on that max CPP if you are single. Canadians pay a lot more sales tax. Because of universal Medicare for over 65 in the US, health care costs are not an issue for either.

Thats not a huge difference- but a substantial one.

Which confirms my impression that in the US even people with a good negotiated pension plan do that within the context of more reliance on the public pension.

But this is rough and ready number crunch. Does anybody know whether that general comparison of mine is true?

ETA: possible adjustment required in those figures for Canada. I'm not sure how the GIS works, but I think 50% of all your other income [including CPP] is subtracted from the GIS. So if you get the max CPP, but no other income, that may leave a GIS of $100+ per month, on top of the CPP+OAS. 

And that, of course, is why the NDP proposed them as a first act.

Thank you, ygtbk, for bringing coherence to this thread. I'm just enjoying the ride. Perhaps an old retired fart is allowed to do that?

Urgent-All Media--Occupation Underway at Federal Finance Minister's Office-Flaherty Betrays Canadians

Thanks, CF, great news!

Of course, that Sid Ryan character is just some kind of Commie, trying to discourage individual Canadians from managing their own financial futures.

A soupcon of support for Dwight Duncan as well,"working the phones", even though we all note that FINALLY the Liberals have latched on to a winning position against the neocons.

B.C. and Saskatchewan will have difficulty going onside with Alberta only because of their greater exposure to the social democratic, egalitarian ideas of former years.

From CUPE:

http://cupe.ca/campaigns [97]

That traitor Charest has joined Alberta in sucking up to Flaherty and the financial institutions:

Quebec opposes higher CPP benefits

Speaking of traitors, the announcement was made by Finance Minister Raymond Bachand - ex-CEO of the Québec Federation of Labour's "Solidarity" Fund!

We'll see if the PQ wakes up and opposes this. And I haven't seen QS say anything on the issue.

[Memo to self: Letter to Dwight Duncan, my Ontario MPP, to follow...].

duplicate post

A possible compromise between the positions of:

a) "Let's double CPP", and

b) "Now is not the time for a payroll tax increase"

would be to schedule a contribution increase for say 2013-2019, for something like the CLC proposal. This would allow everyone to claim victory. It's possible that someone like Dwight Duncan is smart enough to propose this, but I'm becoming less convinced that the finance ministers have thought this through.

Ya their shitty economy is too fragile to withstand tax rates that have existed in other rich countries long time.

I don't understand Quebec's objections, since they administer their own QPP.  As for Alberta, they can choose to follow the same path and opt out.

Ontario might want to think about that itself, and collect its own income taxes as well, as Quebec does-- then discuss equalization policy, and who gets what. 

NOT a "compromise" would be to raise the Guaranteed Income Supplement and set in morion a CPP addition (the CPP goes to people who WORK).  This is the NDP position when I last heard. And of course, Jimmy and Steve would have sounded Quebec opinion long ago.

If Flaherty and opinion within an independentiste following in Quebec (obviously that's the only way Charest and "former" union people can get away with it) actually bring this off, the opposition will have very little to go to the electorate with next spring.

Harper will win this showdown - as he wins them all without exception - because of the petty partisan interests of the "opposition" parties. I haven't even seen a comment yet from the NDP or the Bloc - Goodale made some critical comments today. But even if they all condemn it, they will not work together on this issue any more than they did on EI reform or Afghanistan or child care or the detainee documents or Kyoto. Only pressure from below can possibly knock some sense into these arrogant and selfish leading cliques. Otherwise, a Harper dictatorship will haunt us for a long time to come.

The latest half-measure in response to Flaherty's betrayal - and even there, you see them saying that Flaherty's plan is ok, but its "not enough" - the discourse of a loser:

Six provinces call for CPP expansion ahead of Kananaskis meeting

We can still win this one. It's my understanding that Quebec is not as against it as the media is making it sound. They have issues there of course but I was told they wouldn't stand in the way of this. Only time will tell.

I would think the NDP is keeping their powder dry on this one right now. This could be a good issue to take into an election and they don't want to box themselves into a corner.

Harper made a mistake not killing this earlier (from his point of view). He never though the CLC and their affiliates could get this proposal to this point. Now he's worried it may happen and he over reached.

Tomorrow will be interesting.

This could be a big headache for him.

"Finance minister" rejects calls to enhance CPP

Are there no RRSPs? Are there no private sector pensions?

Harper winning on this or not, has little or nothing to do with the opposition parties.

As long as they are government, playing this game is a piece of cake. It doesnt take any genius or even any bullying wedging strategy.

The battle is not just what this government does. For one thing, they may be gone soon. Not to be counted on. But the counter strategy is to keep the enhancements going as a demand. If that at least appears in the election- even realtively back in issues priorities, all the better. If the government is out, it will not do any good unless the issue of the enhancements has been kept going.

The NDP will continue talking up the enhancements. So far the Liberals are. They may or may not continue. I suspect the Bloc will decide they have other fish to fry- mostly wedge issues around 'standing up for Quebec'.

They will continue to do this seperately and according to their different election strategies. If you are looking for them to get together and issue some joint demand on the need for pension enhancements, you are looking completely in vain.

Thanks for the link, Fidel. Note that since the article quotes Flaherty as saying

"This is not the time to proceed with implementation. There may be some difference of opinion about that, but we will see during the course of the meeting."

and

"We should keep working on it, and if we can then arrive at a consensus a year or two from now, that would be the time to do it. We have our triennial review which is due in 2012 - we review the Canada Pension plan as a matter of course - so that might work as a timetable."

the use of the word "rejects" seems a little strong.

When there's a demand for change, and you don't accept the demand, what nicer word would you choose than "rejects"?

Do you also believe the military mission will end in 2011?

Ken, I thought I was the one who said they would put their petty partisan concerns in first place?

Having said that, I'm rather astounded that the Liberals have actually said something:

Conservative pension scheme a betrayal: panned by Liberals, provinces, unions and experts alike

The two parties I vote for federally haven't yet said a damned word. The NDP's lead item is on "credit card fairness" (because of the Christmas shopping season!), while the Bloc is celebrating a decision by the CRTC that appears to allow further oligopolization of broadcast media ownership in Québec.

The Liberals, of course, will drop this issue as soon as it deems it poliically safe to do so, at which point one of the other jokers may or may not pick it up.

Unionist don't bait.

Closing for length.