Ontario Pension Plan feedback wanted?

The Ontario government it appears is seeking feedback on its new Retirement plan yet it only gives two days to give the feedback according to the following article.  I am not sure if this means they are not serious about getting feedback or if they think that business will have received information about when to give feedback in earlier writings.

Ontario Outlines And Seeks Feedback On The New Ontario Retirement Pension Plan by  James Fu

On December 8, 2014, the Ontario Government introduced Bill 56, Ontario Retirement Pension Plan Act. Bill 56 sets out the parameters for the Ontario Retirement Pension Plan (ORPP). If Bill 56 receives Royal Assent in the future, which is expected, almost all employers that have employees in Ontario will be impacted.

The ORPP is a mandatory provincial pension plan. Some of the parameters of the ORPP that are in the first version of Bill 56 are as follows:

• Contributions to the ORPP will be made by eligible employers and eligible employees. A person who participates in a "comparable" workplace pension plan is not an "eligible employee" (i.e. contributions do not have to be made to the ORPP with respect to such persons), but the legislation has not yet defined what constitutes a comparable workplace pension plan.
• Contributions will be determined by applying the "applicable contribution rate" (which will be the same for eligible employers and eligible employees but will not exceed 3.8 percent combined) to the portion of the eligible employee's annual salary and wages between the minimum and maximum thresholds. The maximum threshold for 2017 will be $90,000 adjusted in accordance with legislation.
• Normally, retirement benefits under the ORPP will be paid for the life of a plan member beginning at age 65, but such benefits may begin to be paid as early as 60 years of age or as late as 70 years of age as long as they are actuarially adjusted. Retirement benefits under the ORPP will be indexed to inflation.

Bill 56 sets a deadline of January 1, 2017 for the Ontario Government to establish the ORPP. In the meantime, the Ontario Government has released a consultation paper entitled Ontario Retirement Pension Plan: Key Design Questions. Three key policy areas are addressed in the consultation paper:

1. What constitutes a "comparable" workplace pension plan? The Ontario Government has indicated that its preferred approach is to define comparable workplace pension plan as a defined benefit or target benefit multiemployer pension plans. This would mean that defined contribution pension plans, pooled registered pension plans, and group registered retirement savings plans would not be a "comparable" workplace pension plan. The Ontario Government has asked the following question, among others: in your view, what would be the best definition of "comparable" workplace pension plans?
2. What is the right minimum earnings threshold? The 2014 Ontario Budget indicated that earnings below a certain threshold would be exempt from contributions, to reduce the burden on lower-income workers. One question the Ontario Government has asked is how different employers will be affected if the minimum earnings threshold is different than that of the Canada Pension Plan.
3. How to best assist self-employed individuals? One question the Ontario Government has asked is whether Ontario should engage in discussions with the Government of Canada to amend the Income Tax Act rules to allow the selfemployed to participate in the ORPP.

The Ontario Government has provided all parties (including employers) until February 13, 2015 to make submissions on the consultation paper and the ORPP initiative. 

All types of businesses, including small and medium-sized business, may wish to make submissions to ensure that their voices are heard. Members of our Pension and Benefits Group would be pleased to assist your business in making submissions to the Ontario Government on the wide-impacting ORPP legislation and the consultation paper.

On a related note, on December 8, 2014, the Ontario Government also introduced Bill 57, Pooled Retirement Pension Plans Act, 2014 (PRPP Act). Ontario's proposed PRPP Act incorporates many features of the federal Pooled Registered Pension Plans Act, including voluntary participation and contributions by employers, automatic enrolment of employees, locked-in contributions and low cost, but has a few Ontariospecific features where appropriate. We will continue to monitor developments with respect to Bill 57.

the above appeared on a newsletter  called  Labour & Employment News written by staff at  Borden, Ladner and Gervais 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. 

Pressing concerns for Boomers thinking of Retiring

A new boomer survey conducted by Merrill Lynch and Ken Dychtwald’s Age Wave asked probing questions about what boomers plan to do with their “longevity bonus.” Completed in January 2013, the study is based on a nationwide survey of more than 6,300 respondents age 45 and older. What they learned may surprise you. The survey results are summarized in “Americans’ Perspectives on New Retirement Realities and the Longevity Bonus,” downloadable  here 

Findings from the study reveal new insights into people's approaches to and thoughts about retirement, such as:

Finances: When it comes to financial goals, achieving peace of mind is seven times more important to Boomers than accumulating wealth.

Reinvention: Today's retirees are largely not retiring — they view the "longevity bonus" as a chance to explore new options, pursue old dreams and live life to the fullest. Retirement used to mean the end of work. Today, seven out of ten pre-retirees say they would ideally like to include some work in their retirement years. Most are seeking flexible work arrangements, such as part-time work (39%) or going back and forth between periods of work and leisure (24%). In fact, working in later life is increasingly becoming the norm. For example, between 2006 and 2011, only the age 55+ workforce grew, while during the same time, millions of younger workers left or were displaced from the workforce 

Family Interdependencies: With today's economic uncertainty, and with many family members struggling financially, balancing an individual's or couple's retirement needs with the needs of parents, siblings, children and grandchildren is a growing and complicated challenge. The term “sandwich generation” was coined in the 1980s to describe Boomers who needed to care for both children and aging parents. Today, due in part to recent economic hardships, the sandwich generation is transforming into a family cube, with support extending side to side as well as up and down. In our national survey, we asked people age 45+ whether they expect to provide support to family members

Connections: Today's retirees are finding comfort, meaning and safety in connections with family, friends, communities and trusted guides. The end of work also reveals an often unforeseen surprise:  the importance of friendships and relationships with fellow workers. Although pre-retirees think a reliable income is what they'll miss most when leaving work, retirees tell us that it is the social connections that they miss most after they retire. Traditional Values: Retirees today define happiness not in terms of dollars but in terms of new experiences, peace of mind, helping family and making a difference.

The study also offers new insights about sources of concern and the need for guidance, including:

Health Disruptions: Health problems and the cost of healthcare now top the list of retirement worries — even more so among the affluent. Unanticipated medical expenses can derail years of retirement preparation. Sixty percent of bankruptcies in the U.S. today are related to medical bills  and retirees who are struggling with health issues are twice as likely to say they are in a financial crisis. Wealthier pre-retirees and retirees are even more likely to rank healthcare expenses as their top financial worry in retirement.

Falling Short: People don't know exactly how long they will live and feel insecure about their ability to support a very long life.

Home and Community: People are concerned about where they should live in retirement, as well as the need to support adult children and parents' housing and eldercare needs. Multigenerational households are on the rise, doubling since 1980 to more than one in five households. With this in mind, we believe these are the four mainstays of family support:

1.    Financial. 43% expect to provide direct financial support, such as writing a check or providing a loan to a family member.

2.    Housing. 38% expect to provide or help a family member pay for a place to live.

3.    Education. 30% expect to help pay education expenses for a family member.

4.    Healthcare. 25% expect to pay for or help manage a family member’s healthcare or long-term care needs.

The study reveals a strong desire among those approaching and in retirement to know more about the challenges and opportunities that lie ahead, to gain greater clarity about what they hope to achieve, and to understand what is possible

Harbinger of things to come?

In June the following story was printed in an Australian online paper (link here)  If Spain goes ahead with this plan, how many other countries who are feeling the effects of recession and are faced with a growing older population will follow suit.

Spain could soon link state retirement payments to economic cycles and longer life expectancy under recommendations commissioned by the government and published on Friday.

But splits within the group of experts that produced the study on pensions signal a tough road ahead for the government as it pushes for unpopular changes to social security.

Brussels is demanding that Spain reform its pension system by the end of the year, along with other demands for reforms to remove imbalances from the country's economy.

Spain's centre-right government will use the recommendations as the basis for talks with opposition parties and unions over reforms aimed at preventing a long term pensions deficit.

Under one proposed formula, payments would be revised annually in connection with the system's costs and revenues, rather than to inflation as in the past, which could lead to lower pensions and buying power during times of economic crisis.

Another formula would link payments to life expectancy.

The ruling People's Party, or PP, recently passed a reform to restrict early retirement and is now pushing ahead with a wider revision of the system, considered unsustainable due to an aging population, low birth rate and high unemployment.

"We're trying to guarantee sustainability by introducing an alert mechanism, a component with a long-term vision," Victor Perez, head of the recommendations committee, told reporters.

The number of people contributing to state pensions has fallen to its lowest level in a decade after more than 3 million Spaniards lost their jobs and stopped paying into the system.

Spain has 9 million pensioners and the government spends the equivalent of 11 percent of annual GDP on pensions.

Only 17 million workers are currently paying into the system and in 2012 for the first time the government dipped in to the social security reserve fund to cover pension payments, as it struggled with both an economic recession and budget cuts.

A lack of consensus among the dozen, independent scholars who drew up the recommendations reflects the difficulty the PP may have in agreeing on the reform plans later this year.

The country's pensioners, who make up a key portion of the electorate, have been sustaining younger generations that are suffering under the 27 percent unemployment rate, so any cut to their payments could hurt millions of jobless families.

Get the facts straight.

The following is an interesting response from a Canadian perspective on a letter that originated in the US in 2011 and is still making the rounds on the Internet with different names and situations. I like the response, the problem is that there is no Canadian or American Senator named Jeff Smith. There is also no person that I could find name Patty Johnstone in Ontario, who will admit to writing this email and I am not sure about Patty Myers either.

The original response was from an American citizen to a statement made by a US senator as outlined by TruthorFiction.com. Even if these two people do not exist, I do agree with some of the sentiment of their response. I believe that we as Boomers have paid our fair share of taxes to support government programs, which may help us in our retirement. I believe while others don't, that those taxes are the price we pay for a better society. The original writers may be unknown, but the sentiment and anger are real and it was this anger that allowed Donald Trump to win the election in 2016 in the US and what gave Doug Ford the win in the recent Ontario election in Canada. 

Both these men, understand this anger and used it to gain and hold onto power. The anger that was in the original email back in 2010 is still there, for many people the anger is just under the surface, and because it is under the surface the anger is being ignored by many at their peril and being classified by some as fake news. There is a growing minority that allows their anger to come to the surface and a few are acting out on their anger. The actual emails are fake, but the underlying anger is not.

The comment of calling senior citizens the greediest generation was made by Senator Simpson in response to criticism from the opposition of the Simpson Bowles proposal to reduce the deficit and cut spending. 

The angry letter to Simpson surfaced on the Internet in early 2011 but in its original form was anomalously signed. It was not until late 2012 that this letter began appearing attributed to the authorship of Montana citizen Patty Myers.

TruthOrFiction.Com is still working to confirm the real author, but as of today still have no idea who wrote the original letter.

Jeff Smith, the Senator from Québec calls senior citizens the Greediest Generation as he compared "Social Insurance" to a Milk Cow with over a million teats.

Here's a response in a letter from PATTY JOHNSTONE in Ontario ... I think she is a little-ticked off! She also tells it like it is!

Oh sooo true!

"Hey Jeff, let's get a few things straight!!!!!

1. As a career politician, you have been on the public dole (tit) for FIFTY YEARS.

2. I have been paying Canada Pension Plan (CPP) & Ontario Health Insurance Plan (OHIP) for 48 YEARS (since I was 15 years old. I am now 63).

3. My Canada Pension payments, and those of millions of other Canadians, were safely tucked away in an interest-bearing account for decades until you political pukes decided to raid the account and give OUR money to a bunch of zero losers in return for votes, thus bankrupting the system and turning Social Insurance into a Ponzi scheme that would make Bernie Madoff proud.

4. Recently, just like Lucy & Charlie Brown, you and "your ilk" pulled the proverbial football away from millions of Canadian seniors nearing retirement and moved the goalposts for full retirement from age 65 to age 67. NOW, you and your "shill commission" are proposing to move the goalposts YET AGAIN.

5. I and millions of other Canadians have been paying into OHIP & CPP from Day One, and now "you morons" propose to change the rules of the game. Why? Because "you idiots" mismanaged other parts of the economy to such an extent that you need to steal our money from OHIP & CCP to pay the bills.

6. I and millions of other Canadians have been paying income taxes our entire lives, and now you propose to increase our taxes yet again. Why? Because you "incompetent bastards" spent our money so profligately that you just kept on spending even after you ran out of money. Now, you come to the Canadian taxpayers and say you need more to pay off YOUR debt. To add insult to injury, you label us "greedy" for calling "bullshit" to your incompetence. Well, Captain Bullshit, I have a few questions for YOU:

1. How much money have you earned from the Canadian taxpayers during your pathetic 50-year political career?

2. At what age did you retire from your pathetic political career, and how much are you receiving in annual retirement benefits from the Canadian taxpayers?

3. How much do you pay for YOUR government provided health insurance?

4. What cuts in YOUR retirement and healthcare benefits are you proposing in your disgusting deficit reduction proposal, or as usual, have you exempted yourself and your political cronies?

It is you, Captain Bullshit, and your political co-conspirators called Parliament who is the "greedy" ones. It is you and your fellow nut case thieves who have bankrupted the Canadian Pension, OHIP and stolen the Canadian dream from millions of loyal, patriotic taxpayers.

And for what? Votes and your job and retirement security at our expense, you lunk-headed, leech.

That's right, sir. You and yours have bankrupted our benefits for the sole purpose of advancing your pathetic, political careers. You know it, we know it, and you know that we know it.

And you can take that to the bank, you miserable son of a bitch. NO, I didn't stutter.

P.S. And stop calling CPP & OHIP "entitlements". WHAT AN INSULT!!!!

I have been paying into the CPP system for 45 years "It's my money"-give it back to me the way the system was designed and stop patting yourself on the back like you are being generous by doling out these monthly checks

EVERYONE!!! If you like the way things are in Canada delete this.

If you agree with what an Ontario citizen, says, please PASS IT ON!!!

=================================================================

The American response by Patty Myers is below:

Here's a response in a letter from PATTY MYERS in Montana ... I think she is a little ticked off! She also tells it like it is!

"Hey Alan, let's get a few things straight!!!

1. As a career politician, you have been on the public dole (tit) for FIFTY YEARS.

2. I have been paying Social Security taxes for 48 YEARS (since I was 15 years old. I am now 63).

3. My Social Security payments, and those of millions of other Americans, were safely tucked away in an interest-bearing account for decades until you political pukes decided to raid the account and give OUR money to a bunch of zero losers in return for votes, thus bankrupting the system and turning Social Security into a Ponzi scheme that would make Bernie Madoff proud.

4. Recently, just like Lucy & Charlie Brown, you and "your ilk" pulled the proverbial football away from millions of American seniors nearing retirement and moved the goalposts for full retirement from age 65 to age, 67. NOW, you and your "shill commission" are proposing to move the goalposts YET AGAIN.

5. I, and millions of other Americans, have been paying into Medicare from Day One, and now "you morons" propose to change the rules of the game. Why? Because "you idiots" mismanaged other parts of the economy to such an extent that you need to steal our money from Medicare to pay the bills.

6. I, and millions of other Americans, have been paying income taxes our entire lives, and now you propose to increase our taxes yet again. Why? Because you "incompetent bastards" spent our money so profligately that you just kept on spending even after you ran out of money. Now, you come to the American taxpayers and say you need more to pay off YOUR debt. To add insult to injury, you label us "greedy" for calling "bullshit" to your incompetence.

Well, Captain Bullshit, I have a few questions for YOU:

1. How much money have you earned from the American taxpayers during your pathetic 50-year political career?

2. At what age did you retire from your pathetic political career, and how much are you receiving in annual retirement benefits from the American taxpayers?

3. How much do you pay for YOUR government provided health insurance?

4. What cuts in YOUR retirement and healthcare benefits are you proposing in your disgusting deficit reduction proposal, or as usual, have you exempted yourself and your political cronies?

It is you, Captain Bullshit, and your political co-conspirators called Congress who are the "greedy" ones. It is you and your fellow nutcase thieves who have bankrupted America and stolen the American dream from millions of loyal, patriotic taxpayers.

And for what? Votes and your job and retirement security at our expense, you lunk-headed, leech. That's right, sir. You and yours have bankrupted America for the sole purpose of advancing your pathetic, political careers. You know it, we know it, and you know that we know it.

And you can take that to the bank, you miserable s-n of a b-t-h. P.S. And stop calling Social Security benefits "entitlements". WHAT AN INSULT!!!! I have been paying into the SS system for 45 years “It's my money”-give it back to me the way the system was designed and stop patting yourself on the back like you are being generous by doling out these monthly checks.

EVERYONE!! If you agree with what a Montana citizen, Patty Myers, says, please PASS IT ON!!!!

My advice, don't pass it on, it is fake, get the facts straight.

Higher pension age and youth unemployment

One of the myths that is making the rounds is that as we raise the age of retirement, more young people will be unemployed.  There will be many economists who will comment on the idea and dismiss it out of hand. For example in Austria:

An economist has dismissed claims that a higher pension age means more unemployment. Former Institute for Economic Research (WIFO) chief Helmut Kramer said yesterday (Thurs) it was nothing but a "myth" that the number of young people out of work will rise if the average retirement age increases. "There is no connection between a later pension age and rising youth unemployment," Kramer explained.

The ex-WIFO head was made aware of studies on the situation in other countries making it clear that successful attempts to jack up the retirement age do not automatically cause an increase of unemployment among younger citizens.  As you read this examine the words chosen by the economist very carefully, he claims that "retirement age increases do not AUTOMATICALLY CAUSE AN INCREASE IN UNEMPLOYMENT" however he does not say that youth unemployment will not increase.

Kramer said other aspects mattered more in this concern. He named the wrong choice of university study subjects and poor education as influential aspects. So the main cause of youth unemployment is not an increase in the age of people working, but of the poor choices made by the youth--classic blame the victim.

Kramer said a bonus system could help to lower labour market service costs and encourage more people to work longer than they had to. He suggested that everyone willing to retire after the regular pension age should get a significantly higher pension than those quitting prior to the regular age for retirement.

Austrian law is supposed to keep men in work until 65 but research shows that the average retirement age for male workers and employees is 58.9. The situation is similar concerning women. They should remain active members of the labour market until the age of 60 but quit at 57.7 on average. The current average for the real retirement age of people in the European Union (EU) is 63.

The head of the Austrian Organisation of Conservative Pensioners, Andreas Khol, claimed that not everyone who stopped working early did so voluntarily. Khol said the government coalition of Social Democrats (SPÖ) and People’s Party (ÖVP) should implement laws under which "bullying companies" could be fined.

Economy Chamber (WKO) President Christoph Leitl rejected accusations that some firms were acting that way. Only 30 per cent of all Austrians who retired last year did so at the mandatory pension age. The ÖVP wants to create a pension bonus system as suggested by Kramer to make longer careers more attractive to everyone. Bernhard Felderer of the Institute for Advanced Studies (IHS) said: "People’s attitude would change if those who quit prior to the regular pension age face significant cuts of subsidies."

SPÖ Labour Minister Rudolf Hundstorfer decided to invest more on health awareness courses and brochures for employees. The labour minister envisages an increase of the pension age average of two years until 2020. The ÖVP called on its government partner party to do more for rise of four years.

Gray Power in Canada is rising

I received the following email from  a friend of mine yesterday and he received it from another person, who lives in Ontario. I thought I should pass it along, while I agree with some of the ideas here I disagree with the implication that we should not be spending money to help people in other parts of the world. I believe that governments all over the world will be paying the rich by  robbing from the poor, the helpless and the defeated. Harper has been doing that in Canada  for a few years, but by picking on the boomers he has made a big mistake. We should provide more support for our seniors as we continue to support those around the world that need help. Here is the email in full.

The Harper government is saying that at this moment they  cannot afford to make changes to the Canada Pension Plan.  They are also saying that seniors will have to start paying for meds and health care after age 65 because of the strain on the system.  I think that it is time that we let him know what we think.....

CANADA: a country where we have homeless without shelter, children going to bed hungry, hospitals being closed, average income families who can't afford dental care, elderly going without 'needed' meds and having to travel 100's of miles for medical care with no reimbursement of cost, vehicles we can't afford gas for, lack of affordable housing, and mentally
ill without treatment, etc., etc. 

YET.....They have a 'Benefit' for the people of Haiti, ships and planes lining up with food, water, tents, clothes, bedding, doctors, and medical supplies.

What the HELL's wrong with us???

WAKE UP CANADA !!!!

Someone please tell me what the is wrong with all the people that run thiscountry!  We're "broke" & can't help our own Seniors, Veterans, Orphans, Homeless, etc.  But we spent 1.2 billions of dollars for G-20 events!  In  the last few months we have provided aid to Haiti , Chile , and Turkey, as well as Khazakistan , Pakistan and all the other  - literally, BILLIONS of  OURdollars!!

Imagine if the GOVERNMENT gave 'US' the same support they give to other countries.

Our retired seniors  living on a 'fixed income' receive no aid nor do they get any breaks
while our government and religious organizations pour hundreds of  millions of dollars and tons of food into Foreign Countries!  They call Old Age Security and Healthcare an entitlement even though most of us  have been paying for it all our working lives and now when ITS time for us to collect, the government is running out of money.  Why did  the government borrow from it in the first place?

Entitlement my ass, I paid cash for my Old Age Security and CPP!!!!  Just because they borrowed the money, doesn't make my benefits some kind of charity or handout!  Gold plated MP pensions and Civil Service Government benefits, a.k.a. free healthcare,  outrageous retirement packages, 67 paid holidays, 20 weeks paid vacation, unlimited paid sick days --- now that's welfare, and they have the nerve to call me a 'greedy senior' and my retirement, an entitlement.

Sad isn't it?  Lets hope it creates awareness! DO YOUR PART!

Things will only change is when this kind of email translates into voting results at the polls.  As of today, seniors out number ANY OTHER type of voter even by race, religion, or age.  WHEN ARE SENIORS going wake up and understand WE have the POWER to shape legislation?  All WE need is the will power to do so!

PLEASE SEND THIS BACK AROUND TO ALL YOUR FRIENDS MAYBE THEN THE "GREY REVOLUTION" will begin.  FORWARDING THIS TO EVERYBODY IS A START!!!

99% of people won't have the guts to forward this.  I'm one of the 1% -- I Just Did.

Will eliminating retirement income send seniors back to chicken coops

In the past few months there has been an increasing movement to reduce or eliminate, public sector pensions in many US states. From a Canadian perspective this is a trend that is disturbing, especially since our leadership hungers to be to the far right of the conservative "tea party" in the US. The following is from Richard C. Rowland and was posted in The Times Leader

IN 1947, a retired public school principal from California named Ethel Percy Andrus discovered one of her retired teacher colleagues living in a chicken coop, struggling to survive on a meager pension, in poor health, with no means to obtain heath care

The discovery shocked Andrus to take actions that would serve to improve the lives of all older Americans for decades to follow.

An active leader in her California Retired Teachers Association, Andrus reached out to the handful of other state retired school employee organizations that then existed, including the Pennsylvania Association of School Retirees (my employer), and united our organizations to form the National Retired Teachers’ Association (NRTA). Collectively, we lobbied our states and the federal government to enact laws to improve the condition of retired public servants, and we combined the buying power of our individual members to entice companies to produce products and services that individuals need during their later years, including health insurance for persons over age 65, which did not exist previously.

By no means were school retirees the only ones living in chicken coops in 1947. As word of NRTA’s successes for retired educators spread, increasing numbers of older persons who did not work in the public schools turned to NRTA for help.

In 1958, led again by Andrus, we helped establish the American Association of Retired Persons (AARP). What followed were a series of improvements in Social Security, the establishment of Medicare, elimination of age discrimination in our laws and practices, affordable benefits and services designed for seniors and millions of older Americans moving out poverty.

I have watched with growing alarm the demise of defined benefit pension plans in the private sector and read the mounting body of evidence proving that the vast majority of people who now have a 401(k) plan and Social Security will accumulate nowhere near enough to pay their basic living expenses  in retirement. I saw my own retirement account lose half its value twice in the past 10 years, first when the entity managing my funds was implicated in an accounting scandal and again when the money managers on Wall Street wrecked our financial system by bundling and betting on bad mortgages. I witnessed the devastation that occurs when a person outlives his/her retirement savings, as I helped my mother sell everything she owned to pay her nursing home expenses.

The current drive to eliminate the defined benefit pension plans for Pennsylvania’s retired public employees is being advocated by the very same groups and individuals who promoted the elimination of corporate pensions and who have been seeking to privatize and eliminate the guaranteed benefits provided by Social Security. The advocates of replacing defined benefit plans with individual retirement accounts and of privatizing Social Security are one and the same: ultraconservative, libertarian organizations seeking to dismantle any and all government-run programs. 

They include the Commonwealth Foundation in Pennsylvania, funded by Wall Street entities seeking to profit from managing our retirement savings.

At what point do we say no to Wall Street and demand that our elected representatives work to strengthen the systems that enable us to obtain secure sources of income in retirement?

The advocates for eliminating pensions and privatizing Social Security enjoy scaring us with incomprehensible numbers – billions in unfunded public employee pension liabilities, trillions in Social Security shortfalls. The news media love to fuel controversy with stories about outrageous pension amounts that only a select few receive, most notably the benefits collected by retiring legislators who voted themselves far more lucrative pensions than what the typical state or school employee can receive.

All this is intended to convince us that pensions and Social Security benefits are too generous, unsustainable, and need to be eliminated. Really?

The facts are that the average annual pension for a retired public school employee in Pennsylvania is $23,500, and the average annual Social Security benefit is $14,500. 

These are hardly overly generous amounts, considering that the average personal income for Pennsylvania residents is more than $41,000 per year.

Eliminating all guaranteed sources of income in retirement, including pensions and Social Security, would only assure greater profits for Wall Street and a return to the chicken coops for our nation’s seniors.

Richard C. Rowland is executive director of the Pennsylvania Association of School Retirees, a voluntary membership organization consisting of nearly 50,000 retired teachers, administrators and school support personnel. For information, visit its website: www.pasr.org.

Read More 

England and Pensioners

Since Harper loves England, it may only be a matter of time if this problem or something like it occurs here in Canada. The issue is forced retirement at 65 and the problems of needing to work longer to get a pension. Someday soon:


It was only in October last year that the government finally got rid of the “default retirement age”, where employers could fire older workers at will. However, in light of a recent court ruling, it appears that the debate about forced retirement of older workers isn’t over yet.


What’s new is the basis for the forced retirement. On a case that got its judgment this Wednesday, the court found it acceptable to force retirement of older workers to make way for young, up-and-coming workers to climb the career ladder.


In the case, the firm Clarkson, Wright & Jakes wanted to retire worker Mr Seldon, aged 65. It was allowed on the grounds of opening new doors for young people, but the ruling is worrying many older workers. With increased State Pension age, granny-tax grabs and falling annuity rates, workers of the older generation worry about their pensions not being enough, and many must work longer in order to avoid retiring in poverty.


“Public Interest” Necessary
Another way to boost income in retirement is to take out a stakeholder pension, offered by providers like Virgin Money, or other supplementary personal pension.


The ruling came from the supreme court, and it made clear companies wanting to retire older workers must have public interest at heart, meaning opening up positions for younger people.


Legal experts claim it’s an unusual ruling and the first time the “public interest” defence has been applied to age discrimination laws. Cynics already claim that it is little more than a convenient excuse to get around the governments ban on default retirement age, and allows companies to get rid of older workers and hiring new young ones they can pay less. Many older workers count on working a few extra years past their retirement age in order to have a decent income in retirement, and for them this came as a devastating blow.

Conflicting Rulings
The news about the ruling in the CWJ case came at the same time as the Supreme Court made a separate ruling on the issue of age discrimination. It ruled that it may be ageist for companies to try and hire and promote graduates only, since it can be discriminating towards older workers with no degrees.


The CWJ case is already bound to go back to the employment tribunal, on the basis that it was not entirely shown that retiring workers aged 65 is the best way to achieve the goal of bringing younger people into the workforce and into high positions.

Why we will no longer retire early (Part 2)

The point isn’t about how well our retirees are currently doing but rather about how this is about to change. There are basically three factors that explain why older workers have been able to retire early and relatively comfortably. 

First, they built up substantial wealth as homeowners as house prices soared 500% or more in the past 30 years compared with a rise in inflation of just 154%. 

Second, financial assets have enjoyed a good run, the financial crisis notwithstanding, as the median pension fund returned 9.1% (before fees) over the 25-year period ending December 2009.

Third, and most significant, the labour force grew rapidly in the period from 1960 to 2000 because of two phenomena. First, the female participation rate in the workforce doubled from 33% to 67%. Second, the baby boomers entered the workforce. What does this have to do with retirement age? The labour supply grew much faster than the job market, which caused the unemployment rate to rise from an average of 4.2% in the 1950s to 9.6% in the 1990s. Governments, employers and big labour were all anxious to help older workers leave the workforce a little earlier to ease the pressure on the job market, and they all did their part to facilitate early retirement.

All three of these factors are now starting to work against us. First, we may or may not be in the midst of a housing bubble, but even if it isn’t a bubble, there are many reasons why housing prices will climb much more slowly in the future. The net result will be less housing wealth for future retirees. Second, actuaries are all in agreement that future returns in the capital markets will be lower than they were in the past 25 years. This is more than a guess. Bonds have just completed a 30-year rise as interest rates fell from 18% to under 3%, a slide that produced real returns (after inflation) of nearly 9% per annum. This can’t repeat; in past periods that started with low bond yields, we have often seen negative real returns over the subsequent 30 years.

Finally, the demographics are changing. The large surplus in our labour force is diminishing quickly as the female participation rate is levelling off and the baby boomers are starting to exit. This has caused the average unemployment rate in the 2000s to drop to just 7%, versus 9.6% in the 1990s. Once the unemployment rate gets back down to the 5% level—probably in the next decade—we will have just one large pool of potential workers to draw from: people in their 60s who thought they were about to retire.

If the economy needs workers badly enough, it will find ways to keep them working longer—through either incentives for staying or penalties for retiring early. This is more than conjecture. The recent change in the actuarial factors under the Canada/Quebec Pension Plan reflects this new reality, with a bigger reduction for early retirement and a greater increase for postponed retirement. OAS at 67, of course, is another example. The migration from DB to DC pension plans also results in later retirement. We can expect more measures from governments and employers to encourage later retirement (or discourage early retirement) as the unemployment rate continues to fall. The ultimate result is that Canadians will retire later.

Fred Vettese is chief actuary of Morneau Shepell.

Source: www.benefitscanada.com

Why we will no longer retire early Part One

The following article was prepared by  Fred Vettese and published on  April 11, 2012, in the article he talks about why Canadians not already retired will have to wait longer. So as we move into the fall and closer to Labour Day, I thought it would be interesting to see how much working Canadians have to lose. By the way the forces he talks about are at work in most countries of the world, so the pressure to raise retirement age and reduce retirement benefits to keep people working longer is a world issue, not just a Canadian one.

By 2029, Old Age Security (OAS) will not become payable until age 67. After nearly half a century of improvements in government retirement programs, this is the first significant take-away. And it may not be the last.

For the last four decades, demographics and capital markets have worked in our favour, enabling us to enjoy ever-longer periods of retirement. But that era is coming to an end, and the change to the OAS retirement age is not the cause—it is a symptom.

There is a common misconception that we are in the midst of a retirement crisis. Certainly, this seems like a logical conclusion, given the low pension plan coverage in the private sector (now down to only 22% of workers being covered, according to data from Statistics Canada) and the vast amounts of RRSP contribution room that go unused. Nevertheless, our seniors are doing better financially than the working-age population. Using the low-income cut-off (LICO) as our measure of poverty, only 5.2% of seniors are below the LICO compared with 10.5% of people ages 18 to 64. That doesn’t even take into account the fact that we spend more than $30,000 a year on healthcare for each person age 75 and over, compared with roughly $4,000, on average, for everyone else.

The Swedish Pension Plan

 The following is taken from a report in the Globe and Mail  called In Sweden, pension problems are so 1989 posted by Nomi Powell  Posted on Friday, January 21, 2011 1:24PM EST and a report on the Swedish Pension Plan.

Swedes contribute 18.5 per cent of their pay to the system: 16 per cent to the NDC and 2.5 per cent to a private account where money is invested in mutual funds of their choice. The public pension is a significant portion of retirement income – responsible for 75 per cent of the average monthly benefit for men at 17,000 Swedish kronor ($2,562 U.S.) and women at 12,000 kronor. The rest comes from occupational pensions negotiated between companies and unions.

In a radical change, Sweden scrapped its traditional defined benefit pension for what's called a "notional defined contribution" plan (NDC). The notional account recorded each individual's contributions and a rate of return tied to the national per capita real wage growth. There was no "real money" in the account - as in traditional pension plans, contributions fund current retiree benefits – but the system provided a way of keeping score.

When workers retire, their annual benefits are calculated by dividing the account balance by the life expectancy rate and rate of return based on the growth of the economy. Benefits are adjusted each year taking into account changing life expectancies, inflation and the rate of return.


Workers can retire as early as 61, but the longer they stay in the work force, the higher their benefit upon retirement.  The following is a report that perhaps has some ideas for Canada

Pension Reform in Sweden: Lessons for American Policymakers By Goran Normann and Daniel Mitchell, Ph.D. published  June 29, 2000

Sweden was the first nation in the world to implement a universal government-run retirement system, but today it is in the process of privatizing part of its pension program. Facing problems similar to those that beset the U.S. Social Security system, the Swedes decided that personal accounts were the best way of ensuring that today's workers would enjoy a safe and comfortable retirement.

Sweden's former pension system was a tax-financed, pay-as-you-go entitlement program, similar to the United States' Social Security program. And like in the systems in the United States and other industrialized nations, demographic and financial changes were straining Sweden's tax-and-transfer pension programs. There were only two solutions: Raise taxes and cut benefits to prolong solvency, or give workers private retirement accounts.

In Sweden, policymakers decided that privatization was the best solution. The new system has four key features:

• Partial privatization. Workers can invest 2.5 percentage points of the 18.5 percent of their income that they must set aside for retirement. Soon workers will be able to choose the pension fund into which their funds will go.
• Notional accounts. The remaining payroll tax funds a dramatically restructured pay-as-you-go government program. Instead of paying benefits based on years in the workforce and earnings history, the new system provides a pension based on the amount of taxes a worker has paid into the system.
• Safety net to protect the poor. The government will continue to guarantee a minimum pension funded by general tax revenues.
• Transition to protect retirees and older workers. Current retirees and older workers will continue to receive retirement income based on the old program. Workers born from 1938 to 1953 will receive benefits from both the old and new systems as the new system is gradually introduced.

Swedish workers and retirees will benefit from these reforms. The combination of partial privatization and reform of the pay-as-you-go portion of the retirement system will result in a fiscally sustainable system. In addition, private investments over time will allow workers to benefit from compounding returns, which will increase retirement income. Finally, the reform will benefit the Swedish economy. By reducing the payroll tax rate and linking income to pension benefits, Swedish pension reform will increase incentives to work. The shift to a funded system will also increase national savings and provide capital for future growth.

The changes in Sweden's pension system provide important lessons for any country facing the problems inherent in pay-as-you-go, tax-and-transfer pension programs, including the United States. The first lesson is that reform works. As the Swedish reforms demonstrate, countries can change from a pay-as-you-go entitlement program to personal accounts. The second lesson is that reform is popular. Although many consider Sweden the ultimate welfare state, legislators from the right and left united in support of the new privatized system. They saw that the pension program could not continue to function as it had been. As a result, these lawmakers created a stronger retirement system for the Swedish people.

There are many benefits to Sweden's new system, including greater incentives to work, increased national savings, a flexible retirement age, lower taxes and less government spending, opportunities for more reform, a fairer system that no longer redistributes income from the poor to the rich, and greater retirement income for retirees. The reforms in Sweden could be a model for U.S. lawmakers as they grapple with the problem of Social Security.

In Sweden, pension reform has created a better system--better for retirees, better for workers, and better for the economy as a whole. The same advantages would accrue to Americans and the American economy--but only if U.S. lawmakers learn the right lessons from what is happening in other nations.

Göran Normann, Ph.D., President of Normann Economics International, based in Stockholm and Paris, is an associate professor of economics at the University of Lund, Sweden. He has worked with the Federation of Swedish Industries and the Organisation for Economic Co-operation and Development (OECD). Daniel J. Mitchell, Ph.D., is McKenna Senior Fellow in Political Economy at The Heritage Foundation.

Children born today 'will work to 80' under pension reforms in Britain

Let’s hope Harper is not paying too much attention to the pension reforms in Britain. Let’s hope the scandals he faces today will keep him and his minions away from reading what is happening in Britain. The following was posted on May 09, 2012 and shows how the government there is taking steps to destroy the social contract between it and the people.

The state retirement age will rise in line with life expectancy under plans for a radical overhaul of the pension system. By Robert Winnett, Political Editor

A planned increase in the retirement age to 67 will be brought forward to between 2026 and 2028, after which it will be linked to longevity for future retirees. Children born today may not be able to retire until they are 80.  

A separate piece of legislation was also unveiled which will overhaul the pensions offered to public-sector workers, which will in future be calculated on the basis of “career average” earnings rather than a final salary. The schemes will also become cheaper for the taxpayer. The changes have been bitterly opposed by the trade unions in recent months.

The reforms to the pension system were one of the few radical pieces of legislation to be announced in yesterday’s speech. Successive governments over the past decade have grappled with the problems of the complicated state pension and the increased cost of retirement because of sharp increases in life expectancy.

The Government briefing on the changes said it is “committing to ensuring that the state pension age is increased in future to take into account increases in longevity”.

The measures will run alongside a drive to tackle the pensions savings crisis, which will see up to 10 million people automatically enrolled into workplace schemes from this autumn, starting with larger companies.

John Lawson, head of pension policy at Standard Life, said: “If after 2026 the state pension age increases in line with our changing life expectancy, we could expect that someone who is currently 37 won’t be able to start drawing their state pension until they are 70 and someone who is 21 won’t receive it until they are 75.

“This means that children born in 2012 are unlikely to get their state pension until 80, if life expectancy at retirement rises in line with the last 30 years.”

The simplification of the state pension was welcomed by the National Association of Pension Funds.

Joanne Segars, the association’s chief executive, said: “We are delighted by this confirmation of the Government’s commitment to a long-awaited, landmark reform.

“This is another big step towards a simpler, more generous state pension that no longer penalises people for saving. A new system will take millions out of means-tested benefits and will encourage people to take control of their own age by saving towards it.”

She added: “We are all living longer, so it is inevitable that retirement ages move upwards to reflect that. The trade-off for working longer must be a better state pension come retirement.”

Pension debate; do Canadians care?

One of the positions put forward by the government is that Canadians don't care enough about their retirement to plan for it.  This interesting perspective is about laying blame rather than dealing with the issues surrounding retirement. A number of supporters of the idea of changing the way we pay out Old Age Security offer similar arguments. These arguments can be classified as follows: First, that if you did not plan properly for your retirement that is your own problem. Supporters of the government will say something like  If your retirement plan is compromised by a missing $13,000 that you knew years in advance you wouldn’t be getting, it wasn’t a serious plan in the first place.

Or supporters will say that many Canadians now collecting OAS also are still in the labour force, by choice  so it’s not as if 65 is the pivotal age it once was.

The second argument is that with all of the opportunities given to us by the government there is no excuse for not putting money aside for retirement. Of course, I agree that there are opportunities such as the Tax Free Savings, Pension Splitting, Changes to the Canada Pension to reward those who take it later, the ability to sell your personal residence with no taxes and the low rate of Capital Gains tax, and finally the abundance of private sector plans and the ability to maximize contribution's to your RRSP.

The problem is these are only available to those with extra money and this is not most of us. Its not that we cannot be bothered it is because we have other more pressing expenses such as raising children, or paying the mortgage, or buying food or paying rent, or buying gas to run our car, or or or.  The crux of  this argument is that  people do not want to be held responsible for lifestyle choices.Those who hold this argument believe that most of us Boomers included, are spenders and into self-gratification and they want the government to bail them out for bad choices they are making today so they can continue to live the good life when they retire.

There are other explanations as to why we don't take advantage of all of our opportunities to plan for retirement and for these we can look to the field of Behaviour Financial modelling. This area of Economic offers models that hold there are a number of reasons why people don't put money into retirement plans, including:

People are easily influenced by decision framing, which means decisions are often made based on how the options are presented.  Madrian and Shea (2001) have shown that when workers are required to opt-into a pension plan as the default decision (or the non-decision) people will not opt in and the effect is that people save nothing; by dramatic contrast, if the default decision is an automatic enrollment plan started when they are hired or is put into play by a union contract, the default decision is that people will save whatever is the contracted agreement. What this means is that by merely changing the question the decision can be changed from not saving to saving.

People lack willpower. People try to save for retirement, but they too often prove to be limited in their capacity or desire to execute intentions. In a sense, saving for retirement requires behavior similar to those undertaken in other behavior modification programs such as exercising, dieting, quitting smoking, or following through on New Year’s resolutions. It would seem that while people intellectually “understand” the benefits of a specific behavior, and they even have some idea of how to get started, they have difficulty implementing their intentions. Too often, they struggle to take action, and when they do act, their behaviors are often half-hearted or ineffective.

Risk vs Rewards have different meanings. Weber suggests that retirement risks rate low along both dimensions: few people have a palpable fear of impending disaster or of great uncertainty in their retirement planning, as compared to other risks in their lives. In Weber’s framework, the self-control problem of retirement saving must join both cerebral and emotional decision-making simultaneously, if people are to be prompted to take effective action. For example, if one were to experience the risks of retirement in the present so as to stimulate the brain’s affective system, people might attempt a real-world experiment such as attempting to live on, say, two-thirds of their income for the next month.

Too many decisions results in confusion One tenet of contemporary economics is that more choice is good news, but choice, can produce "choice overload" so  the opposite may be true.  If we become overwhelmed with the complexity of the decision many will withdraw and  pension plan participation is reduced. Faced with complex investment choices, and given a myriad of choices, many of us take the default choice and do not choose anything.

Another position taken by supporters of the government is that we really cannot afford to continue to pay because there will not be enough workers to support the program.  The argument goes something like this,  there are now seven workers paying for every one person collecting Old Age Security, in 20 years there will be only 2 workers for everyone worker collecting Old Age Security.

What are the facts about this last statement. In 2031 there will be about 9,935,,000 Canadians over the age of 65 according to Stats Canada. (using the highest growth rate for Canada) while there will be about 24,355,000 Canadians between the ages of 20 and 65, many of whom will be working. Today there are about 21,714,000 million Canadians between the ages of 20 and 65, while there are about 4.981, 000 over 65.

Yes. the number of Canadians over 65 will increase, but so will the number of younger Canadians who are or could be working. Canadians who are working age will increase by about 3 million while the number of Canadians over 65 will increase by about 4 million. But there are many who, while over the age of 65 will continue to work, because they need to work. The argument that those collecting Old Age Security will outnumber the workers 2 to 1 does not make sense to me.

There are many reasons that Canadians do not prepare for retirement and need the Old Age Security, this is a complex issue, which begins with understanding human nature and financial decision making as well as looking at the facts.

The arguments being put forth by the government and its supporters are simplistic and are not based on facts. The government decision will be sold to the public as rational. However, The decision to cut the pension is an ideological decision not an Economic decision. I believe that the conservatives have never been a government that relies on facts and the truth to drive their decisions.

Harper gets $100,000 per year + his retirement allowance at 65

Pension reform is a big issue and has caused many Canadians concern, sleepless nights, and fear. Somethings are so Outrageous that they defy explanation but I am sure there is one. So when I read this in Yahoo News I thought I should share and ask why would the cons not understand how uncaring this makes them look. Maybe they don't care how it looks because they believe that with a majority they can rule Canada without regard for the voters who are struggling to meet daily expenses let alone save for retirement.

OAS eligibility changes to 67 but Harper still gets his ‘retirement allowance’ at 65

All Canadian prime ministers who served at least four years in office are given a $100,000/year allowance beginning at the age of 65. That's $100,000 in addition to their already gold-plated pensions. (emphasis mine)

On Tuesday, the Liberals tried to introduce a sub-amendment to the federal budget which would have raised the eligibility age of the prime minister's allowance to 67.
It was defeated by the Conservative majority.

The Prime Minister's new director of communications, Andrew MacDougall, told PostMedia News changes to MP pensions, including Prime Minister Stephen Harper's retirement bonus allowance, are pending in the coming months.

"There's additional changes the government is looking at that will be part of a legislative package in the fall," he said....
"We're going to consider what they're calling the prime minister's allowance in that package with all MPs and we look forward to the opposition supporting changes to the pension regime for Parliamentarians."

Facts about the allowance to former prime ministers:
- It was introduced in 1963 by former Liberal Prime Minister Lester Pearson
- The cheques, paid monthly, start coming at age 65 and are for life unless the person returns to the House of Commons or the Senate as a sitting member
- Once the former prime minister dies, a designated 'survivor' will receive one-half of the allowance each year.
- According to the Liberals, the benefit is derived from general revenues, just like OAS
- Only two current prime minister's receive the allowance: Jean Chretien and Brian Mulroney
- Here is the legislation:

48. (1) There shall be paid to every person who has held the office of Prime Minister for four years an allowance beginning on the day on which that person ceases to be a member or reaches sixty-five years of age, whichever is the later, equal to two thirds of the annual salary payable under the Salaries Act to the Prime Minister as Prime Minister on that day.

Source: By Andy Radia | Canada Politics – Wed, 4 Apr, 2012