CURC calls for improved CPP-QPP and national summit to deal with seniors’ issues

The federal government should improve the Canada and Quebec Pension Plans and hold a national summit to hear the views of all stakeholders on the pension crisis, says the Congress of Union Retirees of Canada (CURC).

Such a summit is needed because not all of the issues facing seniors can be dealt with through changes in the C/QPP, said CURC President Pat Kerwin in a letter to federal Finance Minister Jim Flaherty.

Kerwin’s letter, dated Aug. 3, was accompanied by a document called “The Experience of Retirees with Pensions” that outlined the various issues seniors are facing with retirement income.

In the best case scenario are retirees like Jim from Winnipeg, who retired after 34 years service with the City and has a defined-benefit pension plan which allows him and his wife to stay in their home on a decent income, says the CURC paper.

ButJim’s happy story is one that fewer workers in the future are likely to experience” because more employers are trying to replace defined-benefit plans with defined-contribution pensions.

There are far too many cases where workers contribute to a pension plan for their entire working lives and then get reduced or no pension because their firm went bankrupt, according to CURC.

“The reality of bankruptcy laws is that retirees can face sudden, unanticipated loss in income when firms declare bankruptcy,” according to the CURC paper. “There are many examples of this.”

“Not only do workers lose under bankruptcy proceedings relative to others but the process often takes years to settle in the courts with constant appeals.”

CURC says the “fallacy” of investing for yourself is exemplified by the case of Maritime Electric in PEI, where workers agreed to change from a defined-benefit plan to a defined-contribution plan, with each employee choosing her or his own investments. Some of the employees hired an investment counselor who invested all their pension money in Nortel, leaving them with nothing when the company went bankrupt.

Even successful investors are hit with fees which can reduce the amount of their pension benefits by up to 40% when they retire, according to economist Edward Whitehouse’s paper “Canada’s retirement-income provisions: An international perspective” posted on the Ministry of Finance’s web site.

The solution to the pension crisis is multi-faceted, according to CURC. It includes pension guarantee funds, changes to bankruptcy laws to give workers a higher priority in the distribution of company assets and increases in the C/QPP, Guaranteed Income Supplement and Old Age Security.

“An expanded CPP allows employers large and small to meet their obligations in the most efficient and least costly way possible,” said CURC. “We believe that it will not only be good economics but also assist in lessening workplace tension as employers resist paying for plans that are more costly to administer.”

Click here to read the ext of CURC President Pat Kerwin’s letter to Finance Minister Jim Flaherty.

Click here to read CURC’s paper, “The Experience of Retirees with Pensions.”

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