OTTAWA, May 6 /CNW Telbec/ - At a meeting today with Ontario Finance Minister Dwight Duncan, the president of one of Canada's largest unions had some startling statistics on how the recession has affected pensioners, as well as some cost-effective solutions to the pension crisis.
"In the past two years, Canadians have seen that economic security at retirement can be jeopardized by a financial system that is increasingly akin to a global casino," said Dave Coles, president of the Communications, Energy and Paperworkers Union of Canada, when presenting CEP's position at a roundtable discussion about the future of our country's retirement income system.
"A worker with a defined contribution pension plan or RRSPs, who retired on May 15, 2008, will have close to twice as much income for the rest of his life as someone who retired almost a year later," he said.
"Retirees in the forest sector have seen their retirement benefits cut by up to 35% because there is no system to protect their retirement savings when their employers face bankruptcy," added Coles.
He outlined the cornerstone of CEP's proposed solution to the pension crisis -- a National Investment Pension Fund that would protect the defined benefit pension plans that are in difficulty. Bankrupt companies would have the assets of their defined benefit plans transferred to the fund, rather than be liquidated, which reduces retirees' benefits by up to 40%.
The fund could be administered by investment professionals, at minimal cost to governments.
Coles also pointed to CEP research showing that increased economic security for Canadians will only be achieved by improved public benefits such the Canada Pension Plan, the Régime des rentes du Québec, Old Age Security and the Guaranteed Income Supplement.
"For example, if the GIS were increased by 15%, the required investment would be $682 million, which is less than 3% of the cost of federal and provincial tax subsidies for RRSPs," he said.
"Phasing in a doubling of CPP and RRQ benefits could be entirely funded by gradually increasing, over a seven-year period, workers' and employers' contributions to the CPP and the RRQ, moving them to 7.7% of wages - a maximum benefit of $20,000 per year, rather than $11,210 as it is in 2010."
Coles was highly critical of the government's consultation process which he said "has excluded the voice of those who are most affected by this crisis."
"There are not enough hearings being held and the dates and locations of those are being withheld until the eleventh hour," he says.
"Last Spring when Parliamentary Secretary Ted Menzies chaired a similar consultation process, the overwhelming message from Canadians was to change the retirement income system - to double the amount of CPP. But the Conservative government sat on its hands.
"They're afraid of getting the same message -- to increase public benefits - that they got last Spring when similar 'consultations' were held. So this time they're holding meetings by stealth."
SOURCE Communications, Energy and Paperworkers Union of Canada
For further information: For further information: Dave Coles, (613) 299-5628