Monday, January 27, 2014

Wynne's Flawed Pension Plans?

The Waterloo Record published an editorial on Wynne's flawed pension plans:
Ontario Premier Kathleen Wynne must be getting ready for a fight. This week she brought in the big guns — former prime minister Paul Martin — to assist in her campaign for a made-in-Ontario pension system.

An election will soon be called in this province. Before that happens, Wynne needs to distance herself from the unpopular legacy of her predecessor, Dalton McGuinty. She needs to create bold policies that bear her own signature. Martin's arrival is a clear sign that Wynne means business with her pension plan. It could become her battleground.

Indeed, it's an issue that resonates. Although Canada has one of the lowest rates of elderly poverty of 17 countries in the developed world (it was 6.7 per cent in the late 2000s, better than every other country except France and the Netherlands, according to the Conference Board of Canada), there is deep anxiety among Canadians about not having dignity in retirement. With profound changes to the economy in recent decades, decent pension plans have deteriorated in a large section of the private sector, where most Ontarians make a living. Moreover, the number of senior citizens is soaring as we age. By 2030, an estimated 23 per cent of the population will be over age 65, double the percentage in 1990.

That said, Wynne's plan to set up an Ontario pension system by imposing higher payroll taxes is deeply flawed. Here are three concerns:

It's a job-killer. Now is not the time for Ontario to take even more money from employers and employees. This tactic threatens to eliminate jobs in an economic environment that remains fragile. This fragility is the reason that Finance Minister Jim Flaherty declined to increase Canada Pension contributions when recently pressed by his provincial counterparts. It is worth remembering that Martin, at a different time in his career, asserted in 1994 that "payroll taxes are a cancer on job creation."

It's a blunt instrument. The Canada Pension Plan, Old Age Security and Guaranteed Income Supplement all exist to keep seniors living in at least modest dignity. Many workers have other arrangements as well, be they private savings or employee pensions. Flaherty estimates that only one in four people are not saving enough for retirement. So why create a universal system for everyone when it is not needed by everyone?

It's a Trojan horse. Premier Wynne doesn't like to call her plan a tax. She says it's "an investment in the future." But hold onto your wallets, folks. If this happens, it won't just be the payments. Chances are we'll also be paying for a bloated duplicate version of the federal pension system. And inevitably, there will be mismanagement. After all, this is the government that thinks the answer to every problem is more government intervention and taxation. This is the government that is making us pay for its mistakes with the gas power plants, the Ornge air ambulance debacle, the green energy failure, the e-health file and soaring electricity bills. Do you really want them messing around with your pension? 
I don't know what they're smoking in Waterloo but pension policy is obviously not their area of expertise. As I stated in my last post, Ontario is sticking it to the feds and not a moment too soon. I actually think they were nice and patient with Flaherty and Harper. I would have been ruthless and gone it alone a long time ago.

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.

Below, Premier Kathleen Wynne has brought on former prime minister Paul Martin to assist with crafting a potential Ontario pension plan. Once again, listen to the press conference, they both understand what is at stake.