Wednesday, January 29, 2014

Ontario's Technical Advisory Group?

Keith Leslie of the Canadian Press  reports, Wynne says new plans for Ontario Pension Plan to be unveiled this spring:
Plans for an Ontario Pension Plan will be unveiled by the minority Liberal government this spring, ahead of a widely expected provincial election, Premier Kathleen Wynne announced Tuesday.

"We believe that we need to set up a structure so that people can save their own money, and they can make investments along with their employers in their future," said Wynne.

The minority Liberal government is worried people are not saving enough for retirement, and is prepared to take action on its own since the federal Conservatives refuse to enhance the Canada Pension Plan, she added.

"This is not something the government dreamed up as an issue," said Wynne. "This is something that comes from people. It really is about people having the opportunity to save for their retirement, and giving them a context within which to do that."

The federal Conservatives say increasing pension contributions amounts to a job-killing payroll tax, an argument Wynne flatly rejected.

"This is not a tax," she said. "This is an investment in the future that individuals and businesses would be making, and it is a responsible way forward."

Bill Morneau, a human resources consultant and a pension adviser to Wynne, said workers need to view contributions as an investment in their future.

"The idea is it's not a tax, it's exactly the opposite," said Morneau.

"It's helping people to do something that they know they need to do, and that's to save more for their retirement."

Ottawa wants the provinces to support Registered Pooled Pension Plans as an alternative to enhancing the CPP, but Ontario rejected that option because they are voluntary, not mandatory.

Many Canadians do not contribute the full amount to their Retirement Savings Plans each year because they are not forced to do so, said Morneau.

"Currently there's a huge amount of leftover room in RSPs, so by having some sort of mandatory savings approach it is going to help people ensure they have enough for the future," he said.

"After you have that mandatory approach, is there a way that people who already have saved enough can opt out, and that's a question we need to address."

Wynne appointed a special panel, headed by former prime minister Paul Martin, to advise the province on how to create a pension plan and whether it would allow people to opt out.

"There needs to be a mandatory aspect to this in order to have the number of people involved that makes it a viable plan, but some of the plans that exist in other jurisdictions have an opt out clause," she said.

"What we know is that where plans like this have been set up and there is an opt out clause, a very small percentage of people actually do opt out."

Ontario's New Democrats said not one Liberal voted for an Ontario Retirement Plan when the NDP proposed it in 2010, and accused the government of being good at naming panels, which they called a stalling tactic.

"Unfortunately, for ten years the Liberals have talked a lot about pension reform, but Ontarians haven't seen any results," said NDP house leader Gilles Bisson.
And true to form, Kelly McParland of the National Post also chimed in reporting, Kathleen Wynne gears up to save Ontarians, whether they need it or not, stating the following:
The Wynne view that people have to be saved from themselves fits with the leftward shift she’s instituted since becoming premier a year ago. She’s indicated she feels Ontarians are willing to accept higher taxes in return for better public transit and plans to campaign on a promise to do just that. As with her pension scheme, the transit tax would apply across the province even though the need is centred mainly in the greater Toronto region. Other municipalities would have to collect the money but could find other projects to spend it on.

She also intends to hike the minimum wage, and to date the increase retroactively to the rate of inflation since 2010. Employers would face an extra 75¢ an hour to the current rate of $10.25, and regular increases as other costs go up. No ceiling would be set despite calls for a $14 minimum. Under a re-elected Wynne government, then, employers would face higher costs for wages and pension payments, while employees would pay more for pensions and extra taxes for transit. And the election hasn’t even been called yet.

Wynne says the new pension increase isn’t a tax, but “an investment in retirement.” It’s a testament of how attitudes have changed — within governments, in any case — in a little over a generation. The CPP was introduced in 1966 by former prime minister Lester Pearson as a complement to the existing Old Age Security program. Only Canadians who joined the workforce after 1966 have spent their entire careers contributing. Prior to that, retirees somehow made due for the entire previous history of the world, via savings, family or extended working lives. But less than 50 years later, people are deemed incapable of choosing for themselves how to prepare for their old age. It could be that some Ontarians simply plan to keep working as long as they can, and don’t see the need for another pension plan. But Kathleen Wynne is going to protect them, whether they like it or not.

The next Ontario election, likely just a few months away, may prove to be a watershed. Ms. Wynne evidently believes voters’ anti-tax bias has dissipated and they are ready for a government willing to borrow, spend and tax, all at the same time. Where Mr. McGuinty belatedly felt the need to embrace a measure of restraint after years of big spending, Ms. Wynne has slowed his drive to balance the budget and says the provincial deficit will still be eliminated, some day. It’s just not clear when.

Maybe she’s right and the province is ready for a shift to the left. Since the disastrous NDP government of Bob Rae the presumption has been that premiers raised taxes at their own peril. As Ms. Wynne occupies ground to the left of centre, today’s NDP of Andrea Horwath may be pushed even further in that direction, leaving only the Progressive Conservatives to preach caution and prudence. It’s a clear choice. Whichever way it goes, it’s likely Ontario will feel the impact for some time.
I don't know if Kelly McParland actually believes the garbage he is writing but it's a sad testament of how pathetic and biased reporters have become when they willfully ignore the facts and shamelessly resort to scaremongering tactics.

Earlier this week, I lambasted The Waterloo Record for attacking Wynne's flawed pension plans and clearly stated the following:
The editorial above is pure garbage. It's just a bunch of scaremongering that foolishly claims the new supplemental pension plan(s) Ontario is proposing will "kill jobs." The reality is it will create jobs because as more and more people retire in dignity and security, they will spend more money in their golden years. And in any economy, it's consumption that primarily drives growth.

Canadians need to get informed on what is in the country's best interests when it comes to pension policy. They need to stop listening to those that promote myths on public pensions, warning of our two-tier retirement system, and understand that the only surefire way to cure pension envy is to introduce a universal pension plan where savings are managed by our well-governed public pension funds.  
I want all you bonehead reporters who regularly read my blog to get it through your heads, less than a third of the assets managed by our public pension funds come from contributions (employees and employers). The bulk of the assets come from investment gains, which is better than OAS and GIS as they need to match contributions one for one.

More importantly, enhancing the CPP isn't just good pension policy, it's good economic policy. The Canadian economy is going to go through some very rough seas ahead. I wrote about it last month when I explained why it's time to short Canada and bet on a fall in the loonie and energy stocks (those of you who made serious money taking my advice can show your appreciation by subscribing to my blog on the top right-hand side).

But even though the Canadian economy is going to go through a very rough patch ahead, I remain undeterred and a die hard proponent of enhancing the CPP because I understand macroeconomics better than these bonehead Conservative policymakers in Ottawa, shamelessly pandering to the financial services industry.

Our Canadian banks and insurance companies are so dumb, they just don't get it. Enhancing the CPP for all Canadians is in their best long-term interests but they're so shortsighted and ideologically warped, they just can't see it. As the demographic shift continues and more and more people retire, we need to ensure they do so in dignity and security.

Importantly, the benefits of defined-benefit pensions are grossly under-appreciated. As more people retire with a safe and secure retirement income, they will spend more, contribute to government revenues by paying sales taxes, boost economic growth through consumption and reduce reliance on the social welfare programs, reducing our long-term debt. It's simple folks, enhancing our defined-benefit pension plans makes good long-term economic sense and any economist who tells you otherwise is a complete and utter fool.

I know, there are a bunch of big swinging dicks that will scream at me: "I don't want to give my money to CPPIB, the Caisse, Ontario Teachers, AIMCo or any other public pension fund. I can do a better job managing my retirement than these big, bureaucratic funds." Maybe they can but they're part of the 1% and there is no guarantee that they won't fall into economic hardship or screw up big at some point during their investment horizon.

The reality is most Canadians aren't saving enough for their retirement and even when they do, they're getting raped on fees from mutual fund companies. And Premier Wynne is right, if we don't do something to bolster our retirement system, the economic crisis ahead will only be worse. I actually think it's too late and we've been dithering on this issue for far too long. Harper and Flaherty can pat each other on the back for their silly "Economic Action Plan" but they've done nothing significant to bolster our economy and the proof lies in the economic pudding ahead (it will get ugly).

Make sure you read my next comment where I will rip into President Obama's "MyRA". I promise I won't hold anything back as the "greatest nation on earth" is making another monumental mistake. I don't know who the hell advises the President on retirement security, but it looks like America's 401(k) nightmare will only get worse as this policy is destined to fail miserably.

Finally, Premier Kathleen Wynne announced yesterday that the Ontario government has assembled a new technical advisory group to advise the government on how to strengthen retirement income security for people across the province:
The Technical Advisory Group on Retirement Security is made up of six leading pensions experts from the public, private and non-profit sectors: Bill Morneau, Keith Ambachtsheer, David Denison, Susan Eng, Melissa Kennedy and Jim Keohane.

Alongside former Prime Minister Paul Martin, this group will advise the government on how to improve the retirement income system, including an Ontario-based alternative to a Canada Pension Plan (CPP) enhancement.

The government is moving forward with a made-in-Ontario solution to provide the province's hardworking people with the retirement security they deserve. This group will help the government develop a retirement plan that is viable, responsible and puts people first.

Helping people retire with dignity and security is part of the government's economic plan to invest in people, build modern infrastructure and support a dynamic and innovative business climate.
Quick Facts
  • The Right Honourable Paul Martin is working with the government as Special Advisor on Retirement Income Security.
  • Many Ontarians, including middle- and higher-income earners, may not be saving enough to ensure comparable standards of living in retirement.
  • Fewer than 35 per cent of workers in Ontario have a workplace-based pension plan. Coverage for workers in the private sector is even lower, with only 28 per cent having the benefit of plan membership.
Now that is one top-notch Technical Advisory Group but I'm disappointed I wasn't named to lead the battle on getting the governance right at this new pension plan (might have to leak out my 2007 report to the Treasury Board of Canada and beef it up). I'd love to see David Denison, the former President and CEO of CPPIB, jump into federal politics. He'd be a star candidate, even better than Jim Leech.

Below, watch the press conference where Ontario Premier Wynne and Minister of Finance, Charles Sousa, introduce the Technical Advisory Group (if it doesn't load right away, click here). Thank god I wasn't there, I would have ripped into that reporter asking all those dumb questions and blasted him publicly. What a moron, a testament to the sorry state of reporting in this country.

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