Ted Talks: Seniors
In his latest column, Provencher MP Ted Falk talks about the increased support the Conservative government has given to seniors. I applaud this, and am quite pleased about it. I don’t have much to add except what is in the Green Party platform, Vision Green, about seniors:
Canada is an aging society. Baby boomers are now swelling the ranks of the senior population that is growing in both number and as a proportion of Canada’s total population. Canada’s seniors are also a diverse population, with varying levels of activity and health, living in urban, rural, and First Nations communities. The majority of these older Canadians are women.
Although it is frequently asserted that the aging population is responsible for rising health care costs, this is not the case. Still it is true that seniors will be demanding more health care. Life expectancy is increasing and chronic diseases increase with age. Within 25 years, the number of people living with Alzheimer’s disease or a related dementia could reach 1.3 million and will have the highest economic, social, and health costs of all diseases in Canada. Although many anticipate that this will precipitate a crisis for health care and social services, the Green challenge and opportunity is to provide our seniors with independence, well-being, and dignity.
Seniors have a wealth of experience and have contributed immeasurably to the development of the nation we currently celebrate. Seniors are a resource who can contribute to the economic and social life of their communities and country.
Older Canadians are also a vital and vibrant population, embracing healthy life-style choices and an active retirement. Many social policies impact the ability of aging boomers to stay active. Access to preventative and complementary medicine (see Health care section); access to convenient mass transit as driving may be limited (see climate policy); safe communities (see restorative justice); secure pensions and fairer taxes are all significant Green party policies with real benefits for older Canadians.
Recent debates about pension reform have pitted the Harper Administration, with its refusal to enhance the Canadian Pension Plan (CPP), against many premiers and Opposition parties. Pension reforms must be built upon the system that will best create decent pensions that will keep the elderly out of poverty, require minimum additional contributions, and have low administrative and investment costs.
The only system that is capable of meeting these goals is the CPP – a proven system that is the envy of many countries. Its systems can be modified to offer enhanced benefits. Everyone is familiar with the CPP, which is in sound financial health with the latest actuarial report noting that it is sound for at least the next 70 years.
Greens are concerned that the pension funds of the CPP have been, since 1997, under management of the Canadian Pension Plan Investment Board (CPPIB). In 2007, Stephen Harper legislated a far more aggressive approach to the management of those funds. The assets of the CPPIB were over $200 billion at the end of 2013, placing it in the top ten of pension plans anywhere in the world. These dollars in the CPP are now being played in the global casino of mergers and acquisitions, wheeling and dealing in take-overs and other higher risk behaviours. Failures in the market could undermine the security of CPP. Greens believe that CPP funds must not be gambled in the market.
Approximately 35% of older citizens are still dependent upon Guaranteed Income Supplement (GIS) to keep them out of poverty. This is partly because the current CPP objective of just replacing 25% of the average industrial wage is too low. A 50% income replacement ratio would dramatically reduce the reliance on GIS to keep the elderly out of poverty and reduce the cost of GIS to the federal government by billions annually.
The Year’s Maximum Pensionable Earnings (YMPE) should be raised to at least $90,000 and consideration given to raising it to the full Income Tax Act limit for Registered Pension Plans (RPP) ($122,222 in 2009) pending an evaluation/review in a decade. Subject to an actuarial evaluation, it is expected that these benefits could be achieved with a phased-in increase of CPP contribution rates, although not through increased contributions by employers or deductions from employee wages. Some of the increase could be covered by redirected reductions in workplace pensions for those with workplace pensions. Redirected GIS savings could be used to offset some of the required contribution increase.
An honest evaluation of the effectiveness of current tax policy will illustrate how inefficient it is for most retirement savings. Net federal RPP’s tax expenditures (concessions) were worth $17.6 and $11.3 billion in 2007 and 2009. RRSP’s cost $12.1 and $8.5 billion in the same years. The loss of provincial revenues adds another 35-40%.
Defined Benefit (DB) plans are much more efficient than Defined Contribution (DC) plans in that they produce significantly higher pensions for the same contributions, yet DC plans get the same tax support.
RRSP’s are terribly tax inefficient in that for the $8.5 – $12.1 billion in annual net tax expenditures (around 30% of total contributions), the median value of RRSP assets by Canadians under age 65 is a woeful $40,000 and those over 65 have less than $55,000 – not enough to rely on to supplement to one’s pension, especially at today’s annuity rates. Only 25% of working Canadians contribute to RRSP’s, only 6% with incomes under $20,000. Prorating tax expenditures to the value of projected pension would bring fairness and equity back into the system.
Phasing in doubling the target income replacement rate to 50% and doubling the YMPE over the next 47 years is the most efficient way to ensure that future retirees will be able to retire with dignity without intergenerational subsidies.
Green Party policies will create age-friendly communities, where active living and well- being are promoted, where seniors have financial security, and where housing and transportation needs are met. In accordance with a Canadian Senate report in April 2009, the Green Party recognizes the need for improved support for mental health, and palliative care, and the need to combat ageism, abuse, and neglect.
Long-term care should not be the only housing and care choice. In a Balance of Care model, more care can be provided in a cost-effective manner by home and community support services.
We believe that the government must take the lead in educating the public about end of life issues, including the limits to artificial life support systems, surgical operations, and chemical therapies to extend life and postpone the inevitable transition from life.
Green Party MPs will:
- Review workplace policies to end mandatory retirement and provide for flexible retirement benefits for those seniors who want to continue working;
- Review federal and provincial laws regulating the administration of pension plans, laws which now allow failure of pension trusts, and the loss of pension benefits which workers have earned, with the view to enacting legislation to protect the pension benefits and recommend that the provincial governments prohibit any business from taking possession of a pension trust fund which it administers, or the earnings thereof;
- Explore risk-sharing for pension plans, including the CPP, to ensure sustainability;
- Resist the shift to voluntary defined contribution plans with inefficient and expensive
fees for a myriad of market driven plans;
- Develop, in collaboration with provincial and territorial governments, a set of national home care objectives in a National Home Care Policy, that incorporates and improves upon existing policies affecting eldercare, including but not restricted to ensuring couples needing support and care can continue to live together, economic allowances (such as tax rebates), living choices, transportation, and respite care;
- Require that all corporate pension plans be audited to ensure that they are adequately funded and properly managed and set a policy directive to take corrective action when they are not;
- Work to enhance CPP by phasing in the doubling of the target income replacement rate from 25% to 50% of income received during working years;
- Ensure all seniors who qualify are made aware of available federal income supplements and instructed on how to apply for them;
- Review, in collaboration with provincial and territorial governments, the current social and legal policies to ensure that citizens and law enforcement officials recognize elder abuse, prevent it where possible, and proceed with appropriate charges and consequences when elder abuse has occurred;
- Help develop national guidelines for care of the frail elderly who have special needs and require care by geriatric specialists;
- Establish and fund a special program to provide grants to non-profit societies setting up palliative care hospices;
- Guarantee the right to draw up a ‘living will’ that gives the power to limit or refuse medical intervention and treatment so the person has the choice of dying with dignity.
You can find Vision Green here.