Some Perspectives on Changing the Pension System

Abstract

This paper addresses the perceived difficulties in making changes to the retirement income system as a whole. We focus on public system reforms and observe some of the changes that have taken place in Canada and in a number of OECD (Organisation for Economic Co-operation and Development) countries. Reforming social institutions is never easy. We examine some of the preconceived notions or “myths” that create public resistance to reform. Further, the complexity of the retirement income system in Canada makes consensus difficult to achieve. Nonetheless, we argue that pension reforms can and should be made to ensure the delivery of promised benefits, and we demonstrate the efficacy of smaller-scale reforms.

The Evolution of Retirement as Systematic Ageism

“…The only feasible possibility for change at the time was the Canada Pension Plan (Little, 2008), which underwent fairly significant adjustments such as increased contribution rates, de-indexation of the pay-roll tax exemption level, the reduction of disability benefits, and the creation of an investment board for a hybrid pay-as-you-go scheme (Beland & Myles, 2005;Hicks, Halliwell, Hebert, & Lenjosek, 2005).…”

Retirement Lost?

“…The 1990s in Canada saw the retrenchment of the welfare state with an ambitious effort to scale back Old Age Security benefi ts in the mid-1990s, an effort ultimately abandoned (Battle, 1997 ;Béland & Myles, 2008 ;Little, 2008 ;McDonald, 1997 ;Weaver, 2004 ). The only feasible possibility for change at the time was the Canada Pension Plan (Little, 2008 ), which underwent fairly signifi cant adjustments such as increased contribution rates, de-indexation of the payroll tax exemption level, the reduction of disability benefi ts, and the creation of an investment board for a hybrid pay-as-you-go scheme (Béland & Myles, 2005 ;Hicks, Halliwell, Hébert, & Lenjosek, 2008 ).…”

“…By 2010, the debate became fi xated on reform of the private pension system (Registered Pension Plans [RPPs] or registered retirement savings plans [RRSPs]) with chiefl y economists and fi nancial analysts at loggerheads over defi ned-benefi t and defi ned-contribution plans (Baldwin, 2008 ;Baldwin & Fitzgerald, 2010 ;Bonnar, 2008Bonnar, , 2009Brown, 2010 ;Canadian Institute of Actuaries, 2009 ;Jametti, 2008 ;McLellan, 2009 ;Mintz, 2009 ;Pesando, 2008 ). The two factions were those who saw this debate as an "unhelpful preoccupation with two familiar but fl awed models" (Robson, 2010 , p. 1) and those who would like to see a reformed model (Ambachtsheer, 2008 ;Baldwin, 2009 ;Hicks et al, 2008 ;Robson, 2010 ). 4 In this article, we raise the question as to whether retirement is lost, as we currently know it in Canada.…”