This article was originally published in the Calgary Herald on April 12, 2010
By Jason Fekete
Andrew Kohsel can testify on multiple fronts to a growing problem plaguing many of today's seniors -- and will soon spread to a large swath of baby boomers.
As the head of a Calgary seniors group and part-time financial adviser in his retirement, he knows that while the ranks of greying Canadians are growing, their bank accounts aren't.Only 38 per cent of workers in Canada are covered by a pension plan, and only 33 per cent in Alberta -- one of the worst ratios in the country, according to provincial government data.
What's more, only two in 10 employees in the private sector have a company pension to help pay for expenses in their golden years. At the same time, the number of retirees is expected to swell as more baby boomers stop working.The numbers don't add up. "There's a lot of people who aren't going to make it," Kohsel, president of the Calgary-based Coalition of Seniors Advocates, said of the plight facing some of the group's members."There's people that don't have enough money to put food on their shelves."
Indeed, insufficient retirement savings and lack of pension plans for millions of Canadians is the dilemma facing federal Finance Minister Jim Flaherty and some of his provincial colleagues, who are in Calgary for the two-day National Retirement Income Summit that starts today.
Conference participants will examine the financial challenges facing retiring Canadians, as well as how to reform the country's pension system and encourage more people to save for their golden years."The lower number in Alberta that actually have a pension plan is of concern," said Alberta Tory MP Ted Menzies, the parliamentary secretary to Flaherty and Ottawa's point man on pensions.
He cautioned, though, that federal and provincial governments must not adopt knee-jerk reforms that could cripple the current system."There isn't the immediate panic that we have to fix this tomorrow," Menzies added. "Let's make sure we fix it right, whatever we do."Alberta Finance Minister Ted Morton, who is scheduled to speak at the conference, wasn't available for an interview.
Wild Rose Country has been seeking a pan-Canadian voluntary pension plan to supplement the Canada Pension Plan, but failing that, is prepared to establish a regional scheme with B.C. and possibly Saskatchewan.
The province has launched its own public consultation, seeking input on how to strengthen the retirement income system, including whether to adopt a voluntary, defined-contribution plan and boost payments to CPP, among other options.
Noel Somerville, chairman of a seniors task force for Public Interest Alberta, said the issue of retirement income should be a growing concern. Many Albertans don't understand the financial pressures once they retire, such as additional costs of health care often covered by employee benefit plans, he said."Many people find themselves with inadequate savings," Somerville said. "We are very concerned about the baby boomers who aren't ready for retirement."
The seniors task force is worried about the limited number of workplaces offering pensions, and disappearance of defined-benefit plans in favour of defined-contribution. The group wants a national supplemental plan that establishes uniformity across the country rather than scattered regional plans.Kohsel and his Calgary-based COSA group, meanwhile, want the province to adopt a mandatory, defined-benefit plan that forces people to save for retirement and promises a specified monthly benefit.
"No matter how hard you try to do this voluntarily, there will be a hell of a lot of people who won't do it," he said.The numbers suggest Canada's savings system certainly needs reform. Statistics Canada reviews in recent years of wealth, debt and savings have shown nearly one-third of working Canadians had no retirement savings, while many of the rest weren't socking away enough cash.At the same time, the country's population is quickly aging. By 2031, about a quarter of Canadians will be older than 65, compared with 13 per cent in 2005, the federal agency forecasts.
Flaherty's stop in Calgary is part of the federal government's cross-country consultation tour. Public input is being sought on proposals such as fattening Canadians' retirement income through a mandatory enrichment of the CPP and a voluntary pension scheme to supplement the public system.
The results of the national consultations will be debated by federal and provincial finance ministers in either May or June, and then taken to individual cabinets for further discussion. No timetable has been set for a final decision, and the provinces have the option of proceeding on their own.
However, Menzies believes provinces are now stepping back from adopting a pan-Canadian or regional supplemental plan, instead focusing their efforts on other priorities and looking at alternatives."They've really backed off," Menzies said about the push from various provinces. "(Morton) shares our concern, but it will be interesting to see how hard he wants to push this."Alberta's Official Opposition, though, is joining seniors groups in demanding the provincial and federal governments act quickly and adopt a mandatory supplemental plan.
"They definitely have to do something," said Alberta Liberal finance critic Hugh MacDonald. "When you see how many workers in the private sector don't have pensions, it should be made mandatory."MacDonald stresses that any supplemental plan must be portable.
Alberta Federation of Labour president Gil McGowan said he's encouraged by the recent push to address what he believes is a looming pension crisis.
However, he argued a series of policy changes are needed to ensure future generations have appropriate retirement savings, including doubling CPP benefits over the next 15 years; making any supplemental plan mandatory; and introducing a federal pension insurance system."Many workers, especially when they're young, don't fully understand the importance of setting money aside for themselves for their retirement," McGowan said.