Here are two stories that reflect the difference between world views on retirement planning. The first is from the Canadian Center for Policy Alternatives and was published by Postmedia news.
The second story is from the Montral Education Institute and posted on the http://www.benefitscanada.com/ website. The first is written from a progressive view and the second from a more right of center perspective. Interesting how when things are framed you may be persuaded to change your personal perspective.
Many Canadians will spend their golden years in poverty, if a government decision to change the eligibility age for retirement benefits isn't reversed, according to a report released by the Canadian Centre for Policy Alternatives
In her report, released Monday, MacEwen notes it would take a considerable amount of hours working in low-wage jobs or self-employment to replace the maximum OAS/GIS (Guaranteed Income Supplement) benefit of about $14,000 per year for individuals, or even to replace the basic OAS benefit of a little more than $5,000 per year.
For many Canadians, in fact, it will require doubling their annual income. "Half of seniors who are self-employed make less than $5,000 a year. OAS is $5,000 a year," says MacEwen, who notes that this burden is especially problematic given the fact low-income seniors - particularly men - have a lower life expectancy.
"What this means is that people will be spending their last years in poverty." In forcing lower paid workers to remain working an additional two years with no OAS benefit - as per federal changes to be phased in over six years starting in April 2023 - MacEwen argues many seniors will be forced - to some degree - to compete with younger workers for entry-level, part-time jobs.
She adds a significant number within that group will simply be unable to do so due to health limitations or caretaker responsibilities.
Indeed, more than half of fully retired workers older than 55 have three or more chronic conditions, such as high blood pressure, diabetes or arthritis.
"We've done a really good job of reducing poverty for seniors in Canada, and this is a step backwards," says MacEwen, a senior economist with the Canadian Labour Congress.
"There are things that can be done to keep people working - low cost and no-cost things - that won't punish the people who can't afford it."
Proposed suggestions include offering seniors more flexible hours and work arrangements; allowing them to receive their pension alongside their wage; developing better skills-matching and retraining programs; and using education to counter stereotypes about older workers.
In his MEI paper, A new paradigm for retirement, Guérard says that, since 1951, life expectancy at 65 has increased from 13 to 18 years for men and from 15 to 22 years for women. Meanwhile, the age of eligibility for pension benefits was reduced from 70 to 65 in the 1960s.
Guérard says that the reform proposed in the 2012 budget only partially corrects this anomaly. In order to avoid having a political controversy erupt over this issue with each new generation, he suggests a more dynamic approach in which the age of eligibility increases automatically as a function of longevity.
“We need to find a balance between years worked and years of retirement,” said Guérard. “To keep the burden of pension benefits from becoming unbearable, increases in longevity must be accompanied by increases in years worked….Furthermore, it is essential that we encourage ongoing training so that workers remain productive longer.”
Data from the Organisation for Economic Co-operation and Development OECD show that in countries where the employment rate for older workers is high, there is also high employment rate for younger workers—and that where one is low, the other is also low. This is at odds with the perception that the old are taking jobs away from the young, says Guérard. On the contrary, a society tends to be more dynamic when workers who have accumulated experience and developed skills remain active longer.
“The linear conception of the stages of life also needs to change,” said Guérard. “There used to be a fairly clear distinction between education, career and retirement. More and more, however, these stages overlap and retirement is being transformed into old age insurance. Already, 54% of Canadian workers see themselves working after the age of 65, either part-time or full-time. This represents a profound shift in the way people think about retirement.”
The second story is from the Montral Education Institute and posted on the http://www.benefitscanada.com/ website. The first is written from a progressive view and the second from a more right of center perspective. Interesting how when things are framed you may be persuaded to change your personal perspective.
Many Canadians will spend their golden years in poverty, if a government decision to change the eligibility age for retirement benefits isn't reversed, according to a report released by the Canadian Centre for Policy Alternatives
The report notes rolling back Old Age Security eligibility to 67, from 65, not only will create hardship for seniors unable to delay retirement - those who are sick or in physically demanding positions, for instance - but also for low-income Canadians who desperately need that benefit to get by.
"It means suffering for people in their old age," says Angella MacEwen, a CCPA research associate. "Choosing to work longer is one thing. But forcing Canadians without workplace pensions or large savings to work full-time past 65 is unfair, especially given the high probability that the jobs many are able to find will be part-time and low paid."In her report, released Monday, MacEwen notes it would take a considerable amount of hours working in low-wage jobs or self-employment to replace the maximum OAS/GIS (Guaranteed Income Supplement) benefit of about $14,000 per year for individuals, or even to replace the basic OAS benefit of a little more than $5,000 per year.
For many Canadians, in fact, it will require doubling their annual income. "Half of seniors who are self-employed make less than $5,000 a year. OAS is $5,000 a year," says MacEwen, who notes that this burden is especially problematic given the fact low-income seniors - particularly men - have a lower life expectancy.
"What this means is that people will be spending their last years in poverty." In forcing lower paid workers to remain working an additional two years with no OAS benefit - as per federal changes to be phased in over six years starting in April 2023 - MacEwen argues many seniors will be forced - to some degree - to compete with younger workers for entry-level, part-time jobs.
She adds a significant number within that group will simply be unable to do so due to health limitations or caretaker responsibilities.
Indeed, more than half of fully retired workers older than 55 have three or more chronic conditions, such as high blood pressure, diabetes or arthritis.
"We've done a really good job of reducing poverty for seniors in Canada, and this is a step backwards," says MacEwen, a senior economist with the Canadian Labour Congress.
"There are things that can be done to keep people working - low cost and no-cost things - that won't punish the people who can't afford it."
Proposed suggestions include offering seniors more flexible hours and work arrangements; allowing them to receive their pension alongside their wage; developing better skills-matching and retraining programs; and using education to counter stereotypes about older workers.
Story Two:
OAS at 67 a “timid” solution: MEI
The federal government’s recent decision to raise the eligibility age for Old Age Security (OAS) to 67 from 65 is an absolute must—but it’s also too timid, says Yves Guérard, an actuary and the author of a new publication from the Montreal Economic Institution (MEI).In his MEI paper, A new paradigm for retirement, Guérard says that, since 1951, life expectancy at 65 has increased from 13 to 18 years for men and from 15 to 22 years for women. Meanwhile, the age of eligibility for pension benefits was reduced from 70 to 65 in the 1960s.
Guérard says that the reform proposed in the 2012 budget only partially corrects this anomaly. In order to avoid having a political controversy erupt over this issue with each new generation, he suggests a more dynamic approach in which the age of eligibility increases automatically as a function of longevity.
“We need to find a balance between years worked and years of retirement,” said Guérard. “To keep the burden of pension benefits from becoming unbearable, increases in longevity must be accompanied by increases in years worked….Furthermore, it is essential that we encourage ongoing training so that workers remain productive longer.”
Data from the Organisation for Economic Co-operation and Development OECD show that in countries where the employment rate for older workers is high, there is also high employment rate for younger workers—and that where one is low, the other is also low. This is at odds with the perception that the old are taking jobs away from the young, says Guérard. On the contrary, a society tends to be more dynamic when workers who have accumulated experience and developed skills remain active longer.
“The linear conception of the stages of life also needs to change,” said Guérard. “There used to be a fairly clear distinction between education, career and retirement. More and more, however, these stages overlap and retirement is being transformed into old age insurance. Already, 54% of Canadian workers see themselves working after the age of 65, either part-time or full-time. This represents a profound shift in the way people think about retirement.”
If life expectancy continues to increase as expected, a fixed age of eligibility for public pension benefits is likely to become increasingly expensive for governments. As disparities in the fiscal contribution demanded from each generation widen, it will also come to be seen as an issue of fairness that there be an appropriate sharing of the benefits and burdens of increasing longevity. Instead of reforming public pension plans every generation or so, a dynamic approach stipulating that age of eligibility is to increase automatically with life expectancy might be perceived as fairer and would be easier to implement politically.
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