NUPGE sounds the alarm on Harper CPP changes

The dream of 'freedom 55' will recede to a new reality of 'freedom 70' for many Canadians if the Conservatives get their way, says NUPGE president James Clancy.

Ottawa (22 Sept. 2009) - The National Union of Public and General Employees (NUPGE) is launching a campaign to fight the proposed Harper amendments to the Canada Pension Plan (CPP).

The changes are being presented as positive reforms but their main intent is to coerce older workers into remaining in the labour force far longer than most would otherwise prefer to stay.

James Clancy, president of the 340,000-member union, says the little publicized changes – unveiled by the Conservatives last May – would transform the dream of "Freedom 55" to a stark reality of "Freedom 70" for millions of Canadians if they take effect as Harper is planning in 2012.

Strip away the misleading rhetoric about "enhancing fairness and allowing workers greater flexibility in their retirement choices" and the reality embedded in the fine print is to "keep workers shackled to their jobs until the age of 70," Clancy says.

"The proposed changes have barely received any media coverage yet they will impact every Canadian outside of those already collecting their pension," he notes. "The media silence has been deafening."

Specifically, the changes would offer workers a "carrot" to remain in the workforce until at least age 65 but then "punish" them financially if they decline to do so. They would also be given additional incentives as a "temptation" to remain on the job until they reach 70 years of age.

In total, the changes would ensure that workers have significantly shorter retirements and draw benefits for far fewer years. If enacted, this is how the CPP as it now exists will change:

1. The carrot.

Workers would no longer be required to quit work to draw early CPP retirement benefits at age 60. Starting in 2012, they could draw early benefits and continue working until age 65 (with both employees and employers continuing to make contributions). They could then collect additional CPP benefits at a rate of 2.5% of income up to the maximum CPP pension ($10,900 as of 2009).

2. The punishment.

Workers who currently choose to retire early receive benefits that are reduced by 0.5% for each month they retire early between 60 and 65. This adds up to a 30% reduction over the full period. As of 2012, Harper is planning to boost the penalty to 0.6%, which translates into a 36% cut for everyone who retires at age 60 instead of 65.

3. The temptation.

The Conservatives also plan to extend the maximum CPP pension age to 70 by offering higher pensions to those who remain in the workforce past age 65. Workers would get an extra 0.7% for each month that the CPP benefit is not taken after age 65. By age 70 this would add up to a 42% increase. (What the government fails to point out is that anyone waiting until 70 would collect benefits for far fewer years before they die.)

Clancy says the net effect of the changes would be to turn Canada's national pension policy into a weapon against older workers instead of allowing them to retire in dignity (and make jobs available to younger workers waiting to fill them).

"Rather than changing the CPP so it becomes a national policy instrument to increase the retirement age in Canada, our federal government should instead be looking at changing CPP in order to provide greater retirement security to all workers," he argues.

"It’s clear that the level of CPP benefits today is too low. It’s equally clear CPP will be the only real source of retirement income for over six million Canadians who do not have workplace pensions or RRSP savings."

The right way to fix the CPP

Clancy says the best way to improve pension coverage and retirement security in Canada is to expand CPP benefits for all workers who currently lack a private work place pension.

"We also support the proposal from the Canadian Labour Congress to increase benefits from 25% to 50% of pensionable earnings, phased in over seven to 10 years, and financed by a modest increase in worker and employer premiums," he argues.

"Like all public programs and services, the CPP is an expression of our collective commitment to one another and to the fundamental principle that all citizens have the right to income security and dignity."

NUPGE is calling on its Components and members across the country to join the campaign against the flawed Harper proposals and to enlist support from all Canadians who will be pressured by the government to remain in the workforce years longer than they would prefer.

"It’s time for all of us to stand together and make our voices heard on this issue. Our message is clear: the Harper proposals which force Canadians to work longer are unacceptable. Instead, we want our federal government to expand CPP and increase Guaranteed Income Security (GIS) benefits in order to achieve greater retirement security for all Canadians.... We need to mobilize against the changes to create much greater public awareness and opposition."

NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE

More information:
Download NUPGE pamphlet: Forget 'Freedom 55' - Canada's retirement security crisis