So the New Year ticked in and, in the process, your paycheque changed. OK, it probably changed in a couple of ways, but I’m most interested in one change: a small increase in premiums for the Canada Pension Plan (CPP).
If no one said anything about it, probably only a handful of people would have said, “Hey, wait a minute” and gotten on the phone to whoever in payroll probably spent a good hunk of their Christmas rejigging the numbers for the first payroll of the year.
It’s not very much.
If you’re making $53,900, it means you’ll see an increase of about $81 a year in what you pay into the CPP — or roughly $3 on every biweekly paycheque.
But it’s a good move, because it’s a reaction to help those without company or government pensions, but it’s also going to be too little, too late for a cohort of pension impoverished Canadians. You’ll pay $3 more, and your employer will pay $3 more — and that will increase through the next passel of years to make the CPP better for all.
But if it were up to me, it would be more money from employees, and even more from employers.
Public sector employees make up about 20 per cent of the country’s workers, so ugly rough math would suggest that, out of the remaining 80 per cent, around one in five employees has a pension plan.
I’ll get to why in a minute.
The increased payments don’t really show up as increased benefits for pensioners until 2065.
And I know, I sound like a broken record on this.
But to me, what’s going to happen in the very near future — the next 15 to 20 years — is a slow-moving catastrophe of elder poverty.
Right now, the newest Statistics Canada numbers — and they’re from 2016 — show that just 37.5 per cent of Canadian workers have a pension plan. That’s not a good plan, a reasonable plan, or a gold-plated plan — it’s any plan whatsoever. And that’s all employees, including the subset of provincial and federal governments, the post office, police departments, soldiers, sailors and military pilots who not only have pension plans, but have decidedly jammy ones.
Public sector employees make up about 20 per cent of the country’s workers, so ugly rough math would suggest that, out of the remaining 80 per cent, around one in five employees has a pension plan.
That’s because one of the great steps forward for the world’s admirals of industry has been to get rid of messy things like pensions.
I know that there are plenty of people who have seized the bull market by the horns and have strategically made the sorts of pension savings they should have as corporate Canada bailed out of pensions. (And made a laughing stock of that briefly trendy concept that companies were a big happy family that cared about their employees. Big happy families don’t generally let the Old-Os freeze quietly in the dark with no dinner.)
As corporate Canada skipped out — of defined benefit plans first, and often all pension plans as they moved to more part-time, gig-based and contract employees — big companies made big money.
That was the time for the federal government to step in and collect considerably larger CPP premiums from both employers and employees — but also more from employers who were stepping away from pension plans to bolster corporate financial results.
As it is, the new premiums — other, larger ones that are already scheduled to follow in future years — will help workers, especially young workers starting out.
But there’s going to be a black hole of people who will have to find ways to make a living, even if it means trying to stay on the job long after they might otherwise retire.
But relax, people. At least pensions are still de rigueur at the top executive level.
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Russell Wangersky’s column appears in 36 SaltWire newspapers and websites in Atlantic Canada. He can be reached at [email protected] — Twitter: @wangersky.
