Another Homeland Security: Strategies for Protecting Pensions
By: Ken Georgetti, President, Canadian Labour Congress Source: AARP.org Date Posted: 2004-11-30 00:00:00-05:00
Organizers of the 'Reinventing Retirement' Conference have asked me to address strategies for adequate retirement income. I would make three immediate observations.
First, while my remarks are informed by the situation in my own country, Canada, I believe they are readily applicable to most developed economies.
Second, the high-profile debate over mandatory retirement is in fact secondary to the real issue: that an informed, personal choice whether or not to retire cannot be realistically made in the absence of secure, adequate retirement income.
Third, while many at this conference will call for new approaches, I would suggest what is truly needed is a return to the more certain and adequate pension environment of a generation ago.
Certainly, the status quo is widely seen as undesirable. We at the Canadian Labour Congress this year commissioned an independent poll to gauge public concerns with retirement security. It should be noted that Canada is a country where consensus is often elusive. Yet, almost three-quarters of Canadians are worried they will have insufficient income to see them through their retirement years.
As well, five of six Canadians aged 55 and over rank retirement security of equal importance to health care. This is particularly telling, given that my country is currently fixated on a national debate over the funding and direction of public health care.
These findings hardly constitute a ringing endorsement of the present status of both public and private pension plans. And small wonder.
As is the case in many countries, public discourse on pensions and retirement security have been unduly influenced by neo-conservative ideology. These radical, right-wing views are buttressed with financial support from the corporate sector and relentless promotion by the media conglomerates that dominate the journalistic landscape in Canada.
The past decade has been characterized by a relentless, concerted attack on the role and viability of our two national, public pillars of retirement security—the Canada Pension Plan (CPP) and the Old Age Security (OAS) program. Despite the right's best efforts to dismantle our public pension regime, it has now conceded that recent contribution reforms have assured the long-term viability of the CPP.
However, as now structured, our public pension plans provide only a minimum level of retirement support. In the absence of income from private pension plans and personal investment income, many seniors are condemned to a near-poverty retirement. This is why labor continues to press strongly for improvements to the public pension regime.
 |
| Source: von Wachter, Till. "The End of Mandatory Retirement in the U.S.: Effects on Retirement and Implicit Contrats." Center for Labor Economics, University of California Berkeley, Working Paper No. 49, March 2002. |
It is clear that we can no longer count on the private sector to provide even existing pension benefits to large numbers of workers. The United States has its Enron. We have our Air Canada and Stelco Steels—high-profile corporate collapses that threaten the viability and payouts of workplace pension plans.
Beyond these extreme examples, we see employers playing the 'competitiveness' card to force a change from defined benefit to defined contribution plans. This, too, is a dagger aimed at the heart of secure retirement. Yet, in non-union workplaces, employees are basically powerless to resist such imposed changes.
Nor can working families count on personal investments for retirement income supplement. Many have seen their net worth decimated in the dot-com meltdown and stock market collapse of recent years. Again, each industrialized nation can point to its own Nortel Networks—a high-flying, high-tech multinational whose shares have collapsed into a fiscal black hole.
Taken together, all this points to the folly of relying on the private sector to deliver the economic security older workers need and deserve as they face their retirement years. The private sector has undermined the stability of our retirement security system. It has threatened the quantity and quality of pension payouts.
In this regard, it is indeed lamentable that the public pension regime in the United Kingdom has been so diminished. For it is British workers—not politicians, corporate directors or investment managers—who end up paying the true price.
Given the climate of private sector scandal and mismanagement, we have called for the managers of corporate pension plans to exercise a higher degree of responsibility and oversight. The hard-earned contributions of our members should be invested in a socially-responsible manner that meets broad public needs, without risking returns on dubious investments.
I have never been one to share the view that the market's 'invisible hand' will set all things right. Governments must play an even more aggressive role in assuring public and private pension plans deliver the goods for working people.
Yet, if my own country is an example, policymakers pay precious little attention to retirement security.
In the face of this policy vacuum, the Canadian Labour Congress has called on our Prime Minister, Paul Martin, to appoint a new Cabinet position—a Minister of State for Retirement Security. We have asked that this newly-created Cabinet Minister work with labor and business to initiate a broad national dialogue on retirement security.
We are still waiting for a formal response. With the governing Liberal Party now facing Parliament in a minority situation, we are nonetheless hopeful that we can advance our concerns in a meaningful way.
To sum up, a continuation along the path we have been following for the past few years will eventually lead us over a precipice. Workers will find themselves with fewer benefits, less predictable payouts and greatly diminished retirement security.
This, then, is hardly a viable 'Strategy for an Aging World'.
Ken Georgetti is president of the three million member Canadian Labour Congress. He chairs the Committee on Workers' Capital of the International Confederation of Free Trade Unions.
preview