Reform and Strengthen Public Pensions

December 4, 2009, 4:30 PM EST

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With Canadians facing a growing pension crisis, delegate after delegate came to the microphones at CAW Council December 4 calling for reform to the Canada Pension Plan and Quebec Pension Plan.

They outlined the importance of strengthening the CPP/QPP for current and future retirees and ensuring there is a strong legacy of public pensions for the next generation.

The reality is that many workers are not covered by a workplace pension, including about 80 per cent of private sector workers. The global financial crisis underscores the need for a fundamental rethinking of public policy on pensions.

"Private plans have failed to provide benefit security, broad coverage and adequate retirement income, while savings schemes such as RRSPs have been a dismal failure, except for high income earners," a CAW leaflet states. Instead, public pensions have significantly reduced poverty among elderly Canadians. Yet public pension reform is crucial.

Delegates unanimously endorsed the Canadian Labour Congress campaign developed to confront the pension crisis. These initiatives include:

- doubling CPP and QPP benefits through a gradual increase in contributions over a seven year period, rising from 4.95 per cent of earnings to 7.8 per cent. These increased contributions would double average earnings replaced by CPP/QPP pension benefits to a maximum of $1,635 per month, in 2009 dollars;

- reducing the impact of a contribution increase on low-income workers through a proposal to double the Year's Basic Exemption;

- increasing the Guaranteed Income Supplement of Old Age Security by increasing the GIS by 15 per cent - $68 per month for single persons and $42 for each spouse of a couple;

- introducing a Canada-wide Pension Insurance Program. Employers who become bankrupt often have plans that are significantly underfunded, leaving many retirees in dire circumstances. Further, current bankruptcy laws put workers' pensions a long way down the list of creditors. Usually, there is little hope of recovery;

- in Ontario, the Pension Benefit Guarantee Fund, which provides protection for private sector-defined benefit plans in the event an employer becomes bankrupt and insolvent, is woefully inadequate. However, covered amounts have not been updated since 1980, and remain at $1,000 per month. Ontario is the only jurisdiction in Canada with such a fund.

CAW President Ken Lewenza said this is an incredibly important campaign and urged all delegates to take as much information back as possible to their workplaces.

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