Whatever happened to Freedom 55?
As the Baby Boomer generation careens towards retirement, those in charge of making Canadaís pension safety nets stretch to cover the bulge are scrambling for ways to achieve that.
Itís not like we didnít know this was coming. Those of us at the tail end of the bulge have had retirement savings pushed in our faces from the time we turned 30. Unfortunately many of us were still reeling from 20 per cent mortgage rates, unemployment, child rearing while paying through the nose for unsubsidized childcare and other challenges that put RRSP purchasing on a back burner. And given the current state of the markets, maybe thatís just as well. You canít lose what you didn't invest.
But we have all, while gainfully employed, paid into the Canada Pension Plan. And weíve had the expectation, as contributing members of Canadian society, to also benefit from any other retirement income programs the government has to offer. That includes Old Age Security.
So, those of us creeping up to the magic age of 65 were more than a tad miffed when Prime Minister Stephen Harper, from a safe distance as the keynote speaker at the World Economic Forum in Switzerland, announced his government is considering upping the qualifying age for that benefit from 65 to 67. Two years doesnít sound like a lot, but hey, for some us, time may be running out.
OAS isnít a lucrative way to fund oneís retirement, but weíve worked for. Weíve earned it.
And, when held up against the truly ridiculous issue of MP pensions, itís a good thing the prime minister was far away across the ocean, so he was able to dodge the barrage of rotting vegetables pelting his way.
Pension plans funded by individual companies, corporations and even the civil service strive to produce a moderate return on investments by employees and the matching contributions of their employers. In many cases these funds have taken their licks in the markets over the years, meaning some with plans for early retirement are opting to work longer to try to top of the losses. Some say average losses since 2008 have been as high as 19 per cent.
MPs, on the other hand, through their power in parliament, have mandated a 10.4 per cent return on their investment, which means taxpayers foot the bill. Some sources, including the Canadian Taxpayers Federation, indicate that translates into $23.30 per year invested by Canadians for each dollar invested by the individual MPs.
An MP who lasts six years in office is guaranteed a $40,000 annual pension at age 55, a full 10 years ahead of the rest of us mortals. CTF says the longer the time served and the higher the office held, the fatter the pension. After 15 years the pension base goes as high as $75,000 and can go as high as $150,000.
Two years less of OAS qualification translates into about $10,000 for an average Canadian. Stacked against the pension potential of those making the rules that might seem a paltry amount, but for others it represents a substantial sum.
I think Iím going to see if Gerry Ritz will adopt me.