Pension must serve precarious future
Remember that wild and crazy idea for a new public pension plan in Ontario? True, it was set aside.
The other premiers co-opted the idea — co-operative federalism — and produced an even better panCanadian plan.
But let’s revisit, for a moment, Ontario’s idea at a particular moment in time.
“The bill offers pension arrangements that are better adapted to a world in which industry needs to be flexible and labour needs to be mobile,” Ontario’s premier proclaimed in the legislature.
Another overreaching reform by the province’s relentlessly leftleaning premier?
“The pensions that people gain will not be forfeited as so many are today . . . and as time goes by there will be more and bigger incomes at retirement.”
Say what you will about Kathleen Wynne, but we’re not talking about her. Not here.
In fact, the above quotation — and quixotic pension proposal — emanated from none other than former Progressive Conservative premier John Robarts in 1963. Back then, Robarts stressed that if other provinces were interested, a reciprocal arrangement could result.
That’s precisely what happened. Ottawa and the other premiers bought into the idea, culminating in the Canada Pension Plan in 1966.
Fast forward five decades later to Ontario’s revived pension crusade led by Wynne, following in the footsteps of Robarts. History repeated itself in the summer of 2016 when, once again, the other provinces came on board — aided and abetted by a change of government in Ottawa
Wynne’s Ontario Retirement Pension Plan, which forced the issue back onto the agenda, was ultimately subsumed by an enhanced CPP. Earlier this month, Manitoba became the latest province to add its signature to a compromise deal ahead of a premiers’ meeting next week in Whitehorse that will celebrate their achievement.
An alert reader pointed out the historic parallels between Robarts and Wynne. Who knew the two shared a passion for pensions?
“I have read your pension articles with interest. I am surprised, however, that you did not refer to Ontario’s planned pension plan in the early 1960s which was the basis of the CPP,” wrote John Brugos, who once worked in the former department of economics and development.
“It appears that Ontario has been in the forefront of Canadian pension planning for many years.”
Then and now. Today, more than two-thirds of Canadians support the enhanced pension plan, according to a Forum Research poll.
But not everyone is buying into the CPP — whether the original version or the future enhancement. The pages of the business press are still brimming with regret about the deal.
The Canadian Federation of Independent Business continues to collect signatures (or more precisely, clicks) for online petitions claiming its members aren’t in the business of helping workers save for retirement.
And the right-leaning Fraser Institute, clinging to its Ayn Rand roots, maintains a running battle against the CPP even in its current, unenhanced form — insisting its enviably low fees, high returns, and continuing bankability are merely a mirage.
I’ve rebutted their shibboleths before — notably the argument that there is no future retirement shortfall to shore up. These critics cite today’s seniors as evidence that retirees can coast on their workplace pensions and abundant home equity.
But the Fraser Institute fails to grasp that an expanded CPP is not, in fact, targeted at retirees or boomers.
It is aimed at younger workers weighed down by student debt, consigned to precarious employment, bereft of workplace pensions, and priced out of the housing market.
Keith Ambachtsheer, director emeritus of the Rotman International Centre for Pension Management, has rebutted — not once, but twice in the pages of the Financial Post — claims that the CPP’s remarkable investment returns don’t stand up to scrutiny, or that private funds consistently do better.
Ambachtsheer echoes what many pension fund CEOs openly admit — that they couldn’t possibly replicate, as individuals, the consistently high returns that can be achieved through scale and access to longterm pools of capital. The notion that most Canadian workers would be better off investing the money in their own invincible RRSPs, somehow beating the big guys while avoiding high fees, is a libertarian fantasy in a volatile investment climate.
That’s why Canadians intuitively understood the appeal of a public pension in the 1960s — first provincially, and ultimately federally. Here’s how S.J. Randall, then-chair of the Ontario Economic Council, explained the challenge as the Robarts plan moved forward in 1963:
“One of the troubles of the labour force is the inability of so many to hold a job for long.”
Sound familiar? Today, we call it precarious employment.
And it is the future. As lifetime jobs and workplace pensions fade into the past, all the more reason to update an outdated CPP. Martin Regg Cohn’s political column appears Tuesday, Thursday and Saturday. mcohn@thestar.ca, Twitter: @reggcohn