Banks Threaten Canadian Pension Plan
Finance Ministers from across Canada are currently meeting in Kananaskis, Alberta to discuss expanding the Canada Pension Plan to prevent a potential crisis in retirement income for future retirees.
The meeting is being touted as a critical turning point on the magnitude of legislation that established the country’s Medicare program, and at stake is the retirement income of Canadians who worry about how they will support themselves as senior citizens. Many Canadians are already behind in saving for retirement due to the economy, and many more have been stung by RRSP and mutual funds disasters.
But though eight of the provincial ministers (Quebec now sides with Ottawa) are aware of the urgency of the issue, it remains to be seen if they can overcome the opposition of Alberta’s Finance Minister, Ted Morton, and a surprising recent defection by federal Finance Minister Jim Flaherty, who withdrew his support after being pressured by Prime Minister Stephen Harper and the private finance industry.
Morton and Harper’s opposition is ideological. The Conservative Party is heavily in debt to banking and financial interests who stand to lose a great deal of money if Canadians are allowed to put more of their savings into the government CPP plan as opposed to individual retirement savings (RRSP’s) and mutual funds that are managed – for hefty fees – by private financial industries.
Alberta Tories Misrepresent
The Alberta Conservative Party, which is scrambling with a health care confidence crisis at the moment, is doing its level best to downplay a host of alarming facts about retirement savings problems. Morton is even misrepresenting the CPP program as a tax payer “social program,” which couldn’t be less true.
In fact, CPP is not funded by taxes at all. It’s financed by matched contributions from workers and their employers and expanding the program would only mean that each group would be required to put a little more of their own earnings and profits aside for future retirement use. It is nothing more than a system that helps Canadians save for their own retirements. What could be wrong with that?
Everything, if you are a bank or financial institution that profits from private retirement programs, and the banking industry stands to lose a few end-of-the-year bonus dollars if the provinces in favor of CPP expansion stand their ground.
Federal Finance Minister a Tool for Private Industry
Flaherty is now shilling a plan for “pooled funds,” which would be run by banks, insurance companies and the mutual fund industry – for a “reasonable” fee. Unlike CPP, these pools would not be guaranteed, nor would they have employer match contributions. They are much like the RRSP’s that are failing to help Canadians prepare for their old age already.
Banks Have Won Before
The last time there was a call for CPP expansion was 1979. Then it was Alberta, Ontario and behind the scenes support from the banks and mutual fund industry that sunk the proposal. With the exception of Ontario’s defection, nothing much has changed. Conservative ideology and private interests are still working against average Canadians to deprive them of saving for their own retirement.
Perhaps if the banking and other industries looking to profit off the wages of the worker were selling a better product, this wouldn’t be an issue at all, but as usual, capitalist interests prefer to stack the decks rather than improve.
What Do You Think?
In the U.S. and in Canada, banks, the mutual fund industry and private financial institutions are living large off profits from products that have not helped the average worker prepare for retirement at all. When will government learn and start protecting the taxpayer?
Let’s hear your thoughts.
Photo credit: Canadian Finance Minister Jim Flaherty by Rocco Rossi