When it comes to public pensions, the sky isn't falling
May 16, 2014
A recent Winnipeg Free Press editorial, Pension Emergency Looming, brings to mind the folk tale of Chicken Little who repeatedly claimed “the sky is falling.” It is becoming clear that the distraction of the public pension falling acorn is really just concealing the fox in the cave: retirement insecurity.
Everyone deserves to retire with dignity and respect. The goal of any retirement savings plan should be to ensure our seniors, who have spent their lives contributing to society, have peace of mind after their working days. Retirees with a reasonable pension continue to contribute, both socially and economically, to a healthy society well after their working years are behind them. The more secure their pension earnings are, the more retirees can contribute to society and the fewer demands it places on social services like rental assistance and health care.
The sad truth is that fewer and fewer Canadian retirees have enough put away to retire comfortably because of stagnating wages, rising cost of living and the hollowing out of universal pension plans. Defined benefit pension plans are part of the answer to the retirement security issue, not the problem.
University of Calgary Professor and tax and public policy expert Jack Mintz, indicates that “the continuing abandonment of defined-benefit plans is becoming a significant public issue that needs to be addressed.” The economic benefits of a fixed income plan ensure retirement security during market upswings and downturns.
The fact is we can afford defined benefit pension plans and need to push for retirement security for every Canadian. The Globe and Mail reported earlier this year that pension plans in Canada are healthier than they’ve been in 12 years (according to Mercer Pension Health Index). The report says that the average pension plan is 99.9 percent funded at the end of 2013, which means that most plans have the assets to pay promised benefits.
Actuaries regularly monitor the health of Manitoba’s Superannuation Pension Plan to ensure its long-term stability. These actuarial reports are readily available and their recommendations regularly result in minor adjustments to contribution rates to ensure potential risks are mitigated.
Defined benefit pension plans are a net benefit to our economy and ensure a decent quality of life for retirees. Doesn't it make more sense then to quit dwelling on deceptive doomsday scenarios for our public pension plans and instead get to work enhancing retirement security for all Manitobans and all Canadians?
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