Every day in Canada over 1,000 Canadians turn 65. Is retirement only for a lucky few?
Here is a story of two Vancouver Island neighbours. One neighbour worked for a university while another worked for a forestry company.
The neighbour who worked in forestry got laid off when their employer went bankrupt. They had to downsize and sell their home and as money ran out over the next few years they had to move off Vancouver Island to look for work. Their retirement plans went out the window.
The other neighbour who retired from the university enjoys regular holidays, lives in the same home and has made various renovations and participates in a number of leisure hobbies.
Who will be able to retire?
There is a growing sense of unfairness among workers who don’t work for the public sector, two thirds of whom don’t have any kind of company pension plan. Those who do have a private company plan have seen them converted to defined-contribution plans, where their pension depends on what the invested funds provide at retirement.
Senior level public sector contracts and gold plated public pension plans are unsustainable. In Nanaimo, 80% of the City’s workforce will be eligible to retire with an unreduced pension by 2016.
In 1979 there were 6.35 workers contributing into the BC Municipal Pension Plan for every retiree. By 2009 that ratio had dropped to 2.72.
The average homeowner in Hamilton, Ontario is facing an extra tax bill of $2,700 just to pay for their municipal pension deficit.
There will be a new wave of protesters. The grey wave, “Save our Seniors” will take on a new meaning in Canada as more and more seniors will be living in abject poverty while others will be oblivious that there is a problem.
A typical public sector compensation package allows for a yearly 3% raise coupled with benefits. So for example, someone receiving a $50,000 pension with 3% increases over 20 years would then end up with $90,305 compensation annually.
Our country is broke. The current federal government has spent more money than any other government in history. Canada’s debt stands at over a trillion dollars and is growing every day. The federal government says that it will balance the deficit by 2015 in time for an election. This means reducing health care spending, amongst other services.
Every man, woman and child in Canada owes $72,000 to pay for public pensions. Combine this amount with personal debt ($25,000 per person) and you can see that Canada is heading off the edge of a cliff with no real hope of maintaining our collective standard of living.
The effects of this debt will soon reach municipalities who are already incurring their own massive amounts of debt. When will all the wheels fall off?