February 25, 2010 - No. 41

Pension Debate

Pension Plans Yes! Savings Plans No!
Pensions for All with Guaranteed Defined Benefits!

- Workers' Centre of CPC(M-L) -

• Pension Plans Yes! Savings Plans No! Pensions for All with Guaranteed Defined Benefits! - Workers' Centre of CPC(M-L)
• Human-Centred Pensions and Seniors' Care

 Information Update, USW Local 1005
• Wrecking on the Pension Front
• Is U.S. Steel's Purchase of Stelco a 'Net Benefit' To Canada? "You Be the Judge: Don't be Fooled" - Jake Lombardo, Plant Grievance Chairman, USW Local 1005
• Two-Tier Pensions - Ron Wells, Executive Member, USW Local 1005
• Letters to the Editor

• OFL/CLC Pension Summit

Ontario NDP Proposal for a Retirement Savings Plan
• Pensions Are a Social Program - Commentary, K.C. Adams

Pension Debate

Pension Plans Yes! Savings Plans No!
Pensions for All with Guaranteed Defined Benefits!

- Workers' Centre of CPC(M-L) -

A pension debate is underway in Canada. To take part effectively in the discussion, the working class must develop, and widely express and defend its own opinion. This opinion must organize themselves as an official workers' opposition that stands in sharp contrast to the official opinion of the owners of capital and their political representatives. A working class opinion that is not its own and is not organized as an effective official opposition both outside and within Canada's political institutions does not amount to much. It is akin to mumbling incoherently in the face of an ugly howling storm.

Where does Canada stand with pensions? Following the Second World War, the working class made some advance in guaranteeing its security upon retirement. These advancements included the Canada/Quebec Pension Plans and the various company-based registered retirement plans with defined benefits, which have been strongest in the public service and enterprises with trade unions. These advances must be vigorously defended against all attacks from the neo-liberal anti-social offensive, which has singled out defined benefit company and public service pension plans for destruction.

As with any phenomenon, pensions have contradictory aspects. Pensions for all with Canadian standard benefits guaranteed by the state represent a progressive aspect. Pensions as savings plans with no guaranteed benefits are a negative aspect.

The working class movement gravitates towards human-centred pensions for all secured by government, which guarantee a benefit at a minimum Canadian standard and higher reflecting workers' earnings during their productive years. Pensions with a government guaranteed benefit are rooted in the reality that in modern Canada, people are born to society and have rights by virtue of being human.

Owners of capital gravitate towards capital-centred pensions based on savings. Pensions as personal or group savings are fabrications of an idealized Canada that does not exist, a fictional place where people are born to extended families and fend for themselves in an economy of mostly petty production.

Guaranteed Pensions versus Savings Plans

The pension debate at this time centres on the issue of pension plans with defined benefits preferably with state guarantees versus savings plans. Political representatives of owners of capital and those allied with big financial enterprises are pushing pensions as savings plans, and the destruction of defined benefit pensions.

Pension plans that pool the savings of Canadians, either individually or collectively are a guaranteed source of investment money for owners of capital. Most importantly, savings plans masquerading as pension plans block from coming into being modern pension plans with state guaranteed benefits.

Worker politicians demand pension plans with state guaranteed benefits combined with public seniors' care rooted in the human factor/social consciousness and social love. In practical terms, worker politicians demand the renewal of the Canada and Quebec Pension Plans as the foundation of state guaranteed pensions with a Canadian standard minimum and higher benefits depending on workers' earnings during their productive lives. This progressive step forward includes the elimination of the concept of the CPP/QPP as government savings plans and its flowering as a true pension plan for all with Canadian standard defined benefits. This means that pension benefits would be paid from annual state revenue and not from accumulated savings funds invested with the international financial oligarchy.

The material, not political, guarantee of pensions for all with defined benefits is found in the health and vigour of Canada's socialized economy producing and distributing enough social product to meet the needs of Canadians and to humanize the social and natural environments. To bring this into being, an official workers' opposition must organize and fight for the right of Canadians to a say-so and control over the direction of the economy and how social product is claimed, distributed and used. In the final analysis, the socialized economy in the here and now with workers producing added-value is the only material, not political, guarantee of a humane existence for Canada's seniors. The socialized economy is the concern and social responsibility of all Canadians. Active and retired workers must be organized as an effective official opposition to guarantee that the socialized economy is viable, self-reliant and free of crises, and that monopoly right is restricted. At this time in history, an official workers' opposition is necessary to force government to block monopoly right from interfering with the bringing into being of pensions for all with guaranteed defined benefits at a minimum Canadian standard.

Any arguments for savings plans masquerading as pension plans should be vigorously opposed and denounced regardless of where the opinion originates.

Workers and their allies must put the full weight of their numbers, unity, skill and determination behind the defence of the pensions they have and renewal of pensions in a positive direction that guarantees the rights of all. This requires workers mobilizing themselves as an effective official workers' opposition.

Pension plans yes! Savings plans no!
Pensions for all with guaranteed defined benefits!

Human-Centred Pensions and Seniors' Care

Owners of capital recognize pensions as savings that must be used to expand capital. This viewpoint demands pensions and all aspects of seniors' care be factors to expand capital.

The obsolete outlook that Canadians are born to extended families and not to society is wedded to the necessity of owners of capital to seize profit from pension savings plans and seniors' care, where retirees, their families and government hand over money and savings to the owners of capital for everything from pharmaceuticals to nursing care.

The concept of seniors developing new and profoundly humane relationships with those working in seniors' care comes into contradiction with the capital-centred outlook that people are born to extended families, which are mostly if not solely responsible for their relatives, and to the demand of capital to squeeze profit from every facet of seniors' care. Capital-centred seniors' care interferes with good relations between seniors and workers. Respect for seniors within the seniors' care sector begins within a working environment that upholds the dignity of both seniors and seniors' care workers. As in the education and healthcare sectors generally, the quality of care is directly related to the quality of the wages and benefits of employees and their working conditions and the level of investment in the social program.

The working class movement recognizes that government guaranteed pensions with defined benefits should coexist within a society that embraces modern not-for-profit seniors' care of the highest quality. New social forms and methods such as modern seniors' homes and enlightened homecare must be developed and provide answers to caring for seniors in an all-sided humane manner imbued with social love. Seniors' care must include measures to ensure the physical and mental well-being of retirees and all that may entail such as proper housing, healthcare, recreation, culture, human contact with younger generations and lasting relationships. A modern definition of seniors' care is not possible to develop or sustain without organizing it in a conscious public manner using government resources and by upholding the dignity of workers and seniors.

Human-centred pensions are related to seniors' care taken up as a science with the human factor/social consciousness and social love at the centre, and resources of the socialized economy generously mobilized as material support.

Information Update, USW Local 1005

Wrecking on the Pension Front

As we reported earlier, there is a program afoot to attack the system of pensions in Canada. Over 70% of Canadians do not have a workplace pension. These workers will have to rely on CPP benefits and Old Age Security benefits in their retirement, which means that their retirement will be spent in poverty. Some people have been able to purchase RRSPs, but all accounts are that this number is getting smaller, with people not being able to afford to put money aside.

Some workplaces, especially unionized workplaces have defined benefit pension plans. However, the percentage is dropping drastically. There are various strikes or lock-outs occurring across Canada where one of the demands by the companies is to end the defined-benefit plans, either for everyone, for future credits earned or to end the defined benefit plans "for new hires."

Here are some problems with these company proposals:

1) First of all, the reason companies want to replace defined benefit plans with defined contribution plans is that once a worker retires, the company is done with them. If the stock market (where much of the money is invested), takes a dive, the only result is that a worker's pension is reduced or workers have to put their retirement off.

2) By agreeing to eliminate defined benefit pension plans for new hires, unions would be admitting that whatever they fought for all these years (including defined pension plans at a certain rate) are okay for the active workforce, but the younger generation do not deserve these benefits, and actually they are on their own.

3) It violates one of the principles of the Labour Movement of "All for one and one for all!", replacing it with "every man for himself."

4) And once the "new hires" become a large part of the workforce, the company will then make a move to eliminate defined contribution pension plans for everyone.

5) They also appeal to the workers to agree to defined contribution plans by saying that the "workers have more control of their money" and can decide where to "invest it," etc. This in spite of the evidence that only anarchy, crime and corruption exist in the financial markets where this money is invested.

6) Workers have to oppose the attempts by the multi-nationals and the financiers to eliminate defined contribution pension plans, but in the end what is required is to oppose the whole pension savings schemes which are nothing but schemes for increased individual taxes.

In modern Canada where people are born to society and the economy is completely socialized, retirement at a Canadian standard is a right and an important expression of social solidarity. An effective working class opposition must force governments to assume their responsibility to materialize Canadians' social solidarity among the generations by giving the right of all to a Canadian standard retirement a constitutional and legislative guarantee. This would contribute to nation building.

Is U.S. Steel's Purchase of Stelco a 'Net Benefit' To Canada? "You Be the Judge: Don't be Fooled"

- Jake Lombardo, Plant Grievance Chairman, USW Local 1005 -

At Local 1005 we have a long history of protecting our 'hard fought gains' for both the active members and pensioners. These pension plans were formed so we could have a good living when we retired. These were gained through the bargaining process. We may have reduced our demands (such as wages or benefits) in order to win pension increases, and in that way we looked at pensions as deferred wages, even though the new value that is created today goes into funding the pension plans.

When U.S. Steel purchased the old Stelco, Local 1005 challenged the Superior Court who approved the sale, when U.S. Steel wanted to remove two sections from the CCAA agreement that were supposed to protect our pensions; by removing these two provisions we felt our pensions could be put at risk.

(The first section prevented the new Stelco from paying dividends until the pension plans were fully funded. The second section provided for a "cash sweep"; if the company made a certain amount of profit, they would have to put extra money into the pension plans to insure that the plans were funded as quickly as possible).

The courts and the government didn't agree with Local 1005, and allowed U.S. Steel to remove these two clauses.

Local 1005 had an article printed in the Hamilton Spectator on September 10, 2007 where we outlined our concerns. On October 5, 2007 Gretchen Haggerty, the Chief Financial Officer of U.S Steel responded to the letter to the Spectator where she stated that the Pensions and Benefits are safe with U.S. Steel. These were Ms. Haggerty's words two years ago. Now they are trying to get concessions on pensions and benefits from the workers at Lake Erie and because they would not agree to give these concessions, U.S. Steel has locked out the workers. It appears that U.S. Steel is being less than truthful with the workers and retirees of U.S. Steel Canada and with the community about their aims.

When it comes to U.S. Steel asking the workers for concessions it appears to us that

1) U.S. Steel cannot be trusted.

2) U.S. Steel has not lived up to its obligations when it purchased Stelco. (U.S. steel promised the Government of Canada they would keep employment levels at 3,105 workers and production at over 4.3 million tons for three years. This was supposed to prove that the sale of Stelco would be of "net benefit" to Canada.) Remember, these were U.S. Steel's obligations, not the union's or the government's obligations. U.S. Steel shut down Hamilton and Lake Erie and now has Lake Erie locked out since August 3, 2009.

3) U.S. Steel is blaming the economy, but we wonder why Dofasco, which had the same problems as U.S. Steel lived through all their problems without wrecking the company. By all accounts, it cost U.S. Steel a small fortune to first of all shut Hamilton down last year, and then a larger fortune to start it up.

Local 1005 USW has serious concerns whether U.S. Steel wants to live up to their commitments in regard to pension funding. We had a concern whether U.S. Steel's purchase of Stelco would be of a net benefit to Canada in 2007. We have the same concerns today.

Two-Tier Pensions

- Ron Wells, Executive Member, USW Local 1005 -

Companies are now trying (through collective bargaining) to close defined benefit pension plans to new hires and enrol new hires into a defined contributory pension plan (Group RRSP).

It may seem harmless at this time to agree to a proposal that affects workers you don't know, but closing the plan to new hires will undoubtedly affect the future sustainability and viability of your pension plan in the long-run.

Eventually, as the membership population decreases in the defined benefit pension plan due to retirements and terminations and membership in the Group RRSP grows, the employer will likely insist that the defined benefit pension plan is too costly to maintain and demand that it be wound up. At which time, the minority of members still belonging to the defined benefit pension plan will be dependent on the good grace and political will of the majority of members belonging to the Group RRSP -- who have no vested interest in the defined benefit pension plan -- to resist the Employer's attempts to wind-up the defined benefit pension plan.

In the labour relations world, we can point to countless examples where two pension plans operating concurrently leads to the wind-up of the more costly defined benefit pension plan. Closing entry of the defined benefit pension plan to new hires is typically the first step towards winding up a defined benefit pension plan. The employer community is obsessed with how to eliminate its defined benefit obligations.

The goal is to move all employees into the Group RRSP. Like all employers, U.S. Steel wants to limit its funding risk and obligations.

The bargaining unit pension plan is a defined benefit pension plan whereby the benefit level is guaranteed, and the employer is responsible for funding the cost. The cost of the benefits can fluctuate depending on a host of factors such as market performance, demographics, actuarial assumptions, etc. The goal for the Company is to limit its risk to the market and reduce its funding obligations by shifting the workforce away from the defined benefit pension and into a Group RRSP.

With a Group RRSP, the employer contributions are fixed and benefit levels fluctuate with market performance. A Group RRSP plan enables the employer to limit its risk and more accurately and predictably forecast future costs.

In a two-tier pension structure where new hires join an inferior Group RRSP plan, the solidarity of the members will be sharply divided, and there would be no reason for RRSP members to defend the higher benefits of the Defined Benefit plan members.

The two-tier pension structure in other words, is a very dangerous change which may appear harmless because they are targeted at the ‘unborn', but in fact have detrimental long-term impact on the existing membership.

Letters to the Editor

In this Information Update we are printing two letters we received which contribute to the discussion on workers' pensions and the offensive that is being waged against the workers to try to convince them to put their retirement security in the hands of the employers and the financial establishment, the insurance companies, stock market speculators, fund managers, etc. Under various pretexts, the various levels of government and companies that have defined benefit pension plans are working out schemes to convince the workers to give up these plans.

***

Con Job
- Gary Howe, Local 1005 Vice-President -

Why are Workers being told that they are better off with Defined Contribution Pension Plans?

Currently there is a lot of pressure for workers to give concessions by giving up their Defined Benefit Pension Plans and agree to Defined Contribution Pension Plans.

Workers are told that this is a good thing as they will have control of their money, invest it where they want and that it is transferable from job to job.

Defined Pension Plans pay a specific amount (Defined Benefit) per month on retirement, i.e. $2640 a month with 30 years of credited pension in the Stelco pension plan.

Defined Contribution Pension Plans give the employees a set amount (Defined Contribution) per year to invest in their own plan, and the amount of pension they receive depends on how well the plan does at retirement time.

THINK ABOUT IT!

HOW MUCH MONEY WOULD YOU NEED AT RETIREMENT?

In my opinion, currently you would require a million dollars in a GIC with current returns to generate the current amount of monthly pensions that we have negotiated. For example a 3 percent return would generate $30,000 a year. Not by any means a luxurious income and in 30 years, with increasing cost of living, this could be very little to live on per year!

I would raise the following questions.

What is the likelihood of a worker saving this much in their own pension fund? Why would an average worker think that they could do a better job investing their money than a professional money manager who specializes in investing pension funds?

Personal RRSP's have not performed well over the last year.

Why would we think that we are OK! But new employees can manage on this plan and we will never have to worry?

Why would we give this concession, when we have negotiated this as deferred wages for years?

At Stelco, the goal in CCAA bankruptcy was to wind up our Pension Plan and pay retirees less, thus off-loading the deferred wages we worked for years. If we had agreed, it would have only given Rodney Mott and his crew more money on top of the millions they walked away with! We would have been scammed for our pensions!

With Defined Contribution Pension Plans Workers will not be able to retire as early!

This is clearly one of the key factors!

With many financial demands on workers, saving enough on their own for retirement will be a huge struggle: health care, our children's education, and cost of caring for our parents will add to the burden.

Statistics show that the ratio of worker's vs. retirees is becoming quite alarming and this is becoming alarming to many Employers, as well as government. (There are presently 9000 retirees and less than 1000 active workers in the Stelco/Hamilton Plan.)

Quite simply, they do not want workers to retire until they decide you should!

IT IS A CON JOB!

DEFINED PENSIONS ARE THE BEST PLAN FOR WORKERS!

Beware of this scam, to give this up is a huge Concession and a further attack on Workers' Rights!

***

Our Pension Legacy
- Tim Blackborow, Local 1005 Executive Member -

We inherited a legacy from our brothers and sisters. They negotiated a defined pension plan, part of our payment was held back to fund our pensions. We would receive a defined amount of payment in our retirement.

This payment was not dependent on how much money was put in or how it was managed or how the stock market did or how interest rates are. We negotiated cost of living increases as well as indexed pensions to serve our members. We are entitled to payment after thirty to forty years of service that is not dependent on market conditions. We deserve to retire in dignity as do our past retirees as well as our future brothers and sisters.

We only receive and keep what we are willing to fight for. The dignity of labour lies in our fights for our rights and the rights of others.

OFL/CLC Pension Summit

- Ontario Federation of Labour-Canadian Labour Congress
Joint Press Release, February 4, 2010 -

Brothers and Sisters:

The future of Canadians' retirement security hangs in the balance. Pension reform is being debated this Spring. Federal and provincial finance ministers have promised to consult with Canadians and report back by May.

The usual voices are advocating for a system that will benefit the financial industry and the wealthy. The CLC has waged a successful campaign to ensure that the interests of workers are not forgotten in this debate. Labour is advocating for an expansion of the Canada Pension Plan. This safe, low-cost alternative will benefit all workers in every sector of the economy.

Labour's vision and alternative is on the table, but we are fighting against powerful interests. We are asking you to add your voice to this debate. Join us for a one-day pension summit in Toronto on March 27. High profile speakers will discuss the causes of the crisis and the failures of the current pension system. You will hear a debate about solutions for the pension system. You will learn how to apply the strategies from past successes in expanding our social safety net. We need a show of force to send a message to politicians that they have to consider the retirement needs of all Canadians.

The summit will take place on Saturday, March 27, 2010, at the Park Hyatt Hotel, 4 Avenue Road, Toronto, commencing at 9:00 a.m. The registration fee is $125 per delegate (fee will be waived for retirees).

Ontario NDP Press Release

Pensions Are a Social Program
 – Comment on the NDP Proposal for an Ontario Retirement Savings Plan –

- K.C. Adams -

In a modern socialized economy such as Canada's, social programs financed through individual or group savings are regressive and harmful to the economy.

Social programs financed through savings are a regressive (savings) tax on individuals. The (savings) tax is regressive because it taxes individuals at the same rate regardless of income.

The "savings tax" to pay for the pension social program is collected in various ways: a personal payment for an individual or group RRSP; individual payroll deductions for CPP, a company registered plan or the proposed Ontario Retirement Plan or second-level defined-contribution CPP.

One dollar paid as a savings tax towards a social program by a rich individual and one dollar by a worker represent an enormous difference in terms of total assets and earnings. That fact makes the savings tax and all individual taxes such as the GST (HST and provincial sales taxes, user fees for public services etc.) extremely regressive. As well, the potential capacity of the rich for savings dwarfs that of workers.

Buying insurance to pay for social programs is also regressive such as the situation in the United States where the people do not even have state-organized Medicare but that is another issue.

Pensions are a social program and should be financed through annual revenue collected by the state as taxes on enterprises, not from individuals. As a rule, all social programs should be financed by state taxes on all enterprises that employ workers. The Marxist-Leninist Party of Canada calls for increased state investments for all social programs, including pensions.

Owners of capital and their political representatives individualize the social necessities of modern life such as education, healthcare and retirement, making them mostly an individual responsibility unless forced to do otherwise by a workers' opposition. The capitalist perspective influences active workers causing them to consider pensions a future project for themselves individually rather than a social necessity for people in the here and now. Many Canadians are already retired and more retire every day. Pensions, education, healthcare, recreation, culture and the well-being of the unemployed are both immediate and future social needs that require constantly expanding state investments. Those needs cannot be met through individual effort alone or through any amount of individual or group savings. They require the collective effort of a government that upholds its social responsibilities and a working class that is fully political and imbued with social consciousness, and mobilized and employed in the continuous production of sufficient social product and provision of services to meet their own individual and collective needs and the general interests of society.

Social programs financed through savings such as pension savings are harmful to the economy because they remove spending on means of consumption and production from the economy especially the local economy but increasingly also from the national economy. The savings are handed over to the international financial oligarchy and are generally not available locally or regionally to purchase means of production or consumption, which are essential for nation-building.

Canada does not have public not-for-profit financial enterprises mandated to finance nation-building and prohibited from handing over savings to the financial oligarchy. As a result, pension savings usually go into two types of institutions dominated by owners of monopoly capital:

1) private financial enterprises such as the big six banks, mutual funds (with the largest controlled by the banks) and insurance companies;

2) pension funds such as the Caisse de dépôt et placement du Québec, Canada Pension Plan, Ontario Teachers' Pension Plan etc. Canadian pension funds collectively hold $2.2 trillion in assets invested globally through the international financial oligarchy.

Personal savings to fund individual social needs is a common feature of developing capitalist countries where the working class has not yet managed to force owners of capital and their state to organize and invest in social programs for all. For example in China, workers save a significant proportion of their wages for emergency health spending, periods of unemployment, retirement and even education. This is necessary as state-organized social programs are in their infancy. This feature of the Chinese economy seriously limits internal spending on means of consumption stalling growth not associated with exports and putting downward pressure on Chinese workers' standard of living.

Any diversion or retrogression away from financing social programs through state general revenue is a blow to the working class and the rights of all such as private healthcare and education or the NDP's proposal for an Ontario retirement savings plan.

Any extension of financing social programs through state general revenue is a victory for the working class movement. Increased investments in social programs represent a positive reform for the working class. Those political elements calling either for a weakening of social programs generally or for financing them through individual or group savings plans or insurance are opponents of the working class movement and should be publicly and loudly denounced whether they present themselves as representatives of workers and retired people or not.

The Ontario NDP article "A secure retirement for every Ontarian" is a straightforward call for a new Ontario pension savings plan and should not be supported by workers or their allies. The anti-worker thesis of the article is captured in the following quotation from Ontario NDP Leader Andrea Horwath: "An Ontario Retirement Plan is a sensible idea that would allow people who want to save for their retirement the chance to do so, wherever they work."

This thesis is repeated throughout the article in various ways including the statements: "a worry-free retirement savings option," "guarding against sudden drops in retirement savings," "there are millions of people without enough retirement savings," "this plan would offer a flexible, secure retirement savings option to all Ontarians," "Ontarians have told us they want a retirement savings plan."

The pressure to replace secure and adequte retirement benefits with savings plans is reactionary and must be opposed. It is doubly important given the proponents of an Ontario retirement savings plan present themselves as representatives of the working class and retired people. The working class movement must boldly hold high the banner of increased investments in social programs, including pensions. In today's Canada of a socialized economy where people are born to society and have rights by virtue of being human, pensions are a crucial social program that must be state-organized and funded with defined benefits at a minimum Canadian standard and higher commensurate with workers' earnings during their productive years. Governments have the social responsibility to claim enough revenue to fund social programs directly from all enterprises that employ workers.

Boldly denounce the anti-worker programs of representatives of owners of capital.

The working class and its worker politicians must develop and defend their own human-centred thinking and programs and reject and denounce capital-centred thinking and programs. Pension plans yes! Savings plans no!

Reference
A Secure Retirement for Every Ontarian
- Ontario NDP, January 11, 2010 -

(Emphases added by TML for purposes of the above comment.)

All Ontarians would have the opportunity to retire with the security of a decent, dependable retirement income under a new province-wide pension plan unveiled today by Ontario NDP Leader Andrea Horwath.

"No matter where they work, all Ontarians should be able to retire with dignity, security and without worry," Horwath said. "An Ontario Retirement Plan is a sensible idea that would allow people who want to save for their retirement the chance to do so, wherever they work."

An Ontario Retirement Plan would ensure the 65 per cent of Ontarians who lack a pension plan at work would have access to a worry-free retirement savings option that would provide secure, stable retirement income.

Horwath proposes a flexible plan that reflects the realities of today's modern workforce:

Employees can take their pension with them when they change jobs;

The plan protects against stock-market volatility thereby guarding against sudden drops in retirement savings; and

Available to any working Ontarian without a workplace pension.

Horwath and New Democrat Pensions Critic Paul Miller have been meeting with concerned retirees, private and public pension providers across Ontario.

"There are millions of people without enough retirement savings and Ontario's government can't ignore them," said Miller. "The federal government should be moving now to expand the Canada Pension Plan -- but the McGuinty Liberals can't sit on the sidelines and wait."

Susan Eng of the Canadian Association of Retired People echoed Horwath's call.

"This is a sensible, modern plan that is an important first step to ensuring a decent retirement income for everyone. This plan would offer a flexible, secure retirement savings option to all Ontarians, who presently lack a workplace pension plan."

"Ontarians have told us they want a retirement savings plan that will let them retire with security, dignity and the quality of life they've worked hard to build,"

Horwath said. "An Ontario Retirement Plan would open the door to a decent, dependable retirement income for every Ontarian."

How an Ontario Retirement Plan Would Work

An Ontario Retirement Plan (ORP) would be a "targeted" benefit plan with partial cost of living indexing guaranteed. Unlike a defined contribution plan, the assets of the plan are invested for the plan as a whole, and not on an individual basis. The maximum benefit would be between $600-$700/month in 2010 dollars.

Contributions

Every employee not enrolled in a pension plan that matches or exceeds the benefits provided under the ORP would be automatically enrolled in the ORP.

All automatically enrolled employees would be able to opt out individually. All employees that have opted-out could opt back in any time they want.

Employers would be expected to contribute to the new plan -- just as they contribute to the Canada Pension Plan. The full contribution rate would be phased in over time to minimize burdens on business.

The full contribution rate for employees would be phased in over a five year period.

Governance and Administration

Large Ontario public sector pension funds such as OMERS, the Ontario Teachers' Pension Plan, the Hospitals of Ontario Pension Plan have an outstanding track record in both investing and accountability to members and should take a role in administering the plan.

The plan would have an independent governance structure set out in provincial enabling legislation. Representation on the governing board would be broadly representative of Ontario society and have the requisite financial expertise required to govern a large fund of this kind.

Existing smaller plans would be allowed to collapse into the plan by using plan assets to buy ast (sic) service credits for members.

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