Bottom line: Adequate pensions make sense

It will result in job losses and pay cuts. It is an unnecessary tax on employers. It is not financially sustainable.

These criticisms, made in hyperbolic tones, were levelled not at Ontario’s planned retirement plan, but at the Canada Pension Plan when it was launched in 1965. They did not prove accurate, and the same condemnations of the Ontario Registered Retirement Plan will prove inaccurate as well.

Critics are having a field day with the fact that Premier Kathleen Wynne earlier said she might not go ahead with the ORRP if Ottawa agreed to adequate CPP reform. The fact is the Trudeau Liberals wimped out on CPP reform when some provinces, Saskatchewan being a prime example, opposed any reform.

The question is: Does Ontario need a new involuntary retirement saving plan? The answer is yes. And there’s no time to waste.

Canada Pension Plan pays out a maximum of $13,110 a year. Old Age Security pays about $6,800 more. Combined, they total less than $20,000. That’s a recipe for poverty in today’s economy. But believe or not, some pundits have observed people living on that income are “well looked after.” Easy to say if you don’t have to live on it.

Only about half of Ontario workers aged 45 to 54 have workplace pensions. What does the future look like for the other half if they haven’t saved enough? It’s worse for workers 25 to 34 — only about a quarter of them have pensions, due largely to so many employers getting out of traditional pension plans.

Now a good solid conservative view is that all these unprotected workers need to pull up their socks and start saving. That’s true. But it doesn’t consider serious changes in the landscape, such as the dramatic and alarming growth of precarious employment, the growth of part-time and self-employment and the rising cost of just about everything except pay levels. The reality is that far too many cannot or are not saving adequately for retirement.

So what happens when they are retired? They live on $20,000 a year? The chances of them getting sick, disabled and isolated grow dramatically and in f ar too many cases the outcome will require greater and more expensive intervention than if they had a living wage income level to begin with.

The ORRP can go a long way toward changing that bleak prognosis. It will work much like CPP, which works well. It will be managed by an independent authority, not the government. Again, the CCP model. When it’s fully subscribed and operating it will also provide financial horsepower for things like infrastructure investments.

The ORRP makes sense — which is why 70 per cent of Ontarians support it and why the Wynne government is right to move forward with confidence.