If the federal election is called this spring pension reform should be one of the top issues in the campaign. Many factors have brought the issue to the forefront including federal provincial negotiations, the demographic shift as boomers begin to retire in significant numbers, Canadians’ diminished retirement income prospects, and, lobbying campaigns by labour, business and seniors’ groups.

The three pillars of the public pension system are the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). Almost all of the workforce are contributing to CPP and will receive some pension from the plan. That pension is capped at 25% of the 5 year average salary. In 2010 the most you could receive from CPP based on this formula was $11,800.

Service Canada’s website states the maximum monthly OAS benefit in the first quarter of 2011 will be $524. Low income seniors can apply for the Guaranteed Income Supplement which pays maximum monthly rates ranging from $436 to $661.

What this all boils down to on average is not enough to live on if you don’t have other pension income or retirement savings. Roughly one third of seniors receive less than $11,000 in combined CPP and OAS benefits. The average income for someone receiving CPP, OAS and GIS is between sixteen and nineteen thousand dollars a year according to the Canadian Association of Retired Persons (CARP).

Canada does not set a poverty line but rather reference is made to a calculation called the low income before tax cut off which Statistics Canada determines based on family and community size. According to Stats Can, a single person living in a rural area would need $14,303 to live while a resident of one of Canada’s largest cities would need $20,773. So, whether you call it poverty or not, a growing number of people receiving all three of Canada’s public pensions are struggling to get by. Single women pensioners are particularly vulnerable with nearly half of them, 45%, living on inadequate incomes.

The public pension system was never intended to provide a full retirement income but was to supplement private pension plans and personal retirement savings. It is a good system that still makes a tremendous difference for many Canadians; but, the basic premise of people having other sources of retirement income has been undermined by the recent economic crisis. The Canadian Labour Congress has spent the last year lobbying governments to recognize the problem and to implement a phased remedy based on the CPP. In their September 2010 report How it Works (for everyone) they state: “We are facing a pension crisis in Canada. Most Canadians cannot save enough to live in dignity in retirement. Sixty percent of workers have no workplace pensions at all.”

Added to the lack of private pensions the stats on retirement savings paint a grim picture: one third of workers between the ages of 24-64 have no retirement savings; the average RRSP savings held by people age 55-65 is $60,000. The demographic context for this adds a further shudder as by 2030 one third of Canadians will be over 65.

The CLC is advocating phased increases in CPP savings to increase benefits and an immediate 15% increase in GIS benefits. They suggest that raising contributions by 0.43% over seven years would enable the maximum CPP pension to double to $1868 per month in 2010 dollars. For the highest paid workers this would equal a nine cent an hour increase in premiums while the lowest paid worker would contribute two cents an hour more per year. They argue that their proposal “offers a better minimum pension for everyone. CPP benefits are indexed, secure, and portable across jobs.” Young workers would benefit the most as they would have more years contributing higher premiums thus receiving larger pensions.

The CLC report estimates the increase to the GIS would cost $1.1 billion. Poor people don’t stash away money, they spend it. Thus the CLC suggests that the investment would yield immediate returns for all Canadian communities as seniors spend the added GIS money on food, shelter and other necessities. It is an economic stimulus plan aimed at people rather than the traditional infrastructure projects.

The CLC calls on Canadians to change their thinking about pensions just as they did about health insurance. “In the late 1960s, we changed Canada’s health care system for the better. We rejected the old fend-for-yourself system where access to medical care depended on how much insurance people could afford to buy or simply the cash they had on hand. The insurance companies opposed this change too, but the case for medicare prevailed and Canadians are better for it.”

In the last few years pension reform has increasingly caught the attention of politicians at all levels with declarations on the subject coming from the Canadian Federation of Municipalities and Parliament. In June 2009 all parties in the House of Commons supported an NDP motion that called for sustainable retirement incomes through such measures as “expanding and increasing the CPP/QPP, OAS and GIS to ensure all Canadians can count on a dignified retirement.”

With Parliament’s directive Finance Minister Jim Flaherty upped the importance of pension talks already begun with the provinces. There was a pensions’ summit in Whitehorse in December 2009. This was followed in June 2010 by another summit in PEI that resulted in an agreement in principle to look at some increase in CPP benefits. However, in December 2010, Flaherty got the provinces to agree to hold off on improvements to the CPP. Instead the federal government will establish a new mandatory private pension program for people without pensions called pooled registered pension plans. The business lobby won that round but the debate continues in Ottawa.

In the current pre-federal budget negotiations the opposition parties have put pension reform on the short list. If negotiations fail and we head to the polls then pension reform should emerge as a major issue. This would be a good thing as the topic should engage voters and increase turnout because pension reform provides a great vehicle to demonstrate the parties’ different visions for Canada.

Jane E. Burton is a freelance writer who operates her company Memorable Lines from her home in Fanny Bay. For more information on the services offered please visit her website at www.memorablelines.com.