Pension plans

I heard Michael Campbell the other morning talking on CKNW talking about the crises in the US and how people have to understand how this will affect their pension plans and from that he went on to say that Canada is not exempt and that out health care and our Canadian Pension Plans were going to be in trouble. The implication he left the listener with is that the Canadian government would have no choice but to cut pension plans and health care to the boomers, because of the current economic crises. Which is an outright lie, in my mind. The Globe and Mail recently had an article called  Pension plan funding improving in Canada by Janet McFarland posted on Tuesday's Globe and Mail,Published Tuesday, Jun. 28, 2011 12:05AM EDT, Last updated Tuesday, Jun. 28, 2011 8:13AM EDT, part of which said,
"The survey, scheduled for release Tuesday, found 85 per cent of pension plans reported they are at least 80-per-cent funded as of April, which means they have assets equal to at least 80 per cent of their estimated liabilities for providing pensions to members.....
Scott MacDonald, head of pensions, financial institutions and client service at RBC Dexia, said pension plans’ funding has improved due to strong investment performance as well as additional cash contributions from plan sponsors.
“Returns for pension plans have been double-digit territory for some time, and it’s been Canadian equities that have led the way,” Mr. MacDonald said.
RBC Dexia reported in April that Canadian pension funds earned a 2.3-per-cent return on investments in the first quarter this year and a 12-month return of 10.8 per cent as of March 31."

So private pension plans are in good shape as of June, how is the Canada Pension doing? According to the Canada Pension Investment Board results shown here, they have a rate of return of 11.8%.  Full Results here

The CPP Fund holdings summarized below are stated at fair value. Holdings are based on the Consolidated Statement of Investment Asset Mix contained in the CPP Investment Board's financial statements. These investments have been grouped based on the intent of the investment strategies of the underlying portfolios after allocating derivative contracts, associated money market securities and other investment receivables and liabilities to the asset classes to which they relate.

For the year ended March 31 Financial Overview ($ billions) 2011 2010 2009 2008 2007 2006 CPP Fund* 148.2 127.6 105.5 122.7 116.6 98.0 Net contributions 5.4 6.1 6.6 6.5 5.6 3.6 Investment income net of operating expenses*** 15.2 16.0 (23.8) (0.4) 13.0 13.1 Investment Performance (%) ** 2011 2010 2009 2008 2007 2006 Annual 11.9 14.9 (18.6) (0.3) 12.9 15.5 Five-year annualized rate of return 3.3 4.0 2.8 10.7 10.4 8.6 Ten-year annualized rate of return 5.9 5.5 4.3 - - - Investment Portfolio ($ billions) 2011 2010 2009 2008 2007 2006 Equities Canada 21.0 18.5 15.6 28.9 29.2 29.0 Foreign developed markets 50.8 46.2 40.4 47.5 46.1 32.7 Emerging markets 7.6 6.5 4.6 0.7 - - Fixed income Bonds 37.6 35.4 28.4 30.2 29.2 27.2 Other debt 6.1 3.5 1.8 1.1 - - Money market securities 2.3 1.7 (0.8) - 0.4 0.6 Debt financing liabilities (1.4) (1.3) - - - - Inflation-sensitive assets Real estate 10.9 7.0 6.9 6.9 5.7 4.2 Infrastructure 9.5 5.8 4.6 2.8 2.2 0.3 Inflation-linked bonds 3.9 4.4 4.1 4.7 3.8 4.0 Investment Portfolio 148.3 127.7 105.6 122.8 116.6 98.0

* Includes non-investment assets such as premises and equipment and non-investment liabilities. ** Commencing in fiscal 2007, the rate of return reflects the performance of the investment portfolio, which excludes the Cash for Benefits portfolio. *** The CPP Fund includes the non-marketable government bonds that predate the creation of the CPP Investment Board. We take these bonds into account when making investment decisions. Accordingly this financial highlights table for the CPP Fund includes the performance of these non-marketable government bonds.

So why is Mr. Campbell raising the issue at this time, I think it is to start to frame the agenda so the right wing agenda of Mr. Harper and his supporters can shift public thinking to the idea that we have to be prepared to have less services and less income.  (The following is taken from Why Stop Harper website)

Although seniors’ incomes have dropped for the first time in decades, it is clear the Harper government is laying the groundwork to replace Canada’s well-run, cost-effective, and stable CPP with a private, more expensive pension scheme – the Pooled Registered Pension Plan (PRPPMallick: “When Prime Minister Stephen Harper, Finance Minister Jim Flaherty, the government of Alberta and insurance giant Sun Life all agree that a national privatized pension plan is a great idea for your retirement, be very afraid. Feel your fear and let your anger flower.”

According to Sun Life Financial, Canadians are much less optimistic about retirement – and the average Canadian expects to retire at age 68, three years later than reported a year ago. The confidence level of working Canadians slumped to a low 39 in 2011, from 50 in 2008 and 51 in 2009. At the end of 2009, Canadians still believed recovery from the recession would be quicker than they now believe, but unemployment remained relatively high.

When older workers stay on the job it affects the labour market, resulting in fewer job openings and increased competition for younger people. Canada’s youth jobless rate is 14.4 per cent.

In the 2011 federal budget, responding to demands by the NDP, the government offered low-income seniors an extra $300 million annual enhancement to the Guaranteed Income Supplement. The NDP had requested $700 million.

The government ignored the NDP’s request for a doubling of CPP benefits.

Harper’s Income Trust “betrayal.” In 2005, Harper wrote: "Income trusts are popular with seniors because they provide regular payments that are used by many to cover the costs of groceries, heating bills and medicine." Then, without notice or consultation, he terminated them.

 So to move along the agenda to reduce and attack Senior benefits, the right needs spokespeople on Radio, and TV (corus radio and sun tv) to start to frame the agenda on pension and health care so that over the next few years the public will start to believe the big lie (remember the right has learned from the past, while the left still believes in an honest approach) and the frame will shift.  Don't forget that Steven Harper still has his agenda and will take steps to carry it out, he is a very patient and evil man.

 

 Remember that Steven Harper helped found and was 

president of the National Citizens Coalition, founded in 1967 to oppose Medicare, he supported US-style bank de-regulation. In his first budget, Finance Minister Flaherty invited “new players” into the Canadian mortgage market, offering greater choice and “innovation,” thus lowering mortgage insurance standards – the US recipe for disaster. Nevertheless, since the 2008 Financial Crisis, Harper has been taking credit for the relative strength of our financial sector, based on a system he inherited, but didn’t support.

Harper wants the federal government to abandon certain financial and administrative responsibilities – returning to an era 50 years ago before our nation-building social programs. Instead, his government “will look to innovative charities and forward-thinking private-sector companies to partner on new approaches to many social challenges.” Victorian England?

Harper thinks Medicare is provincial and wants to break it up. While heading the National Citizens Coalition, Harper said “the feds” should scrap the Canada Health Act. He doesn’t dare repeat that now, but he rules as though the law guaranteeing Canadians universality, portability, accessibility, and more doesn’t exist. Measures to encourage the provinces to comply with the Act aren't being enforced.