Pension system requires major overhaul to last

Re: OAS reforms badly needed, Opinion, Feb. 2.

To the Editor,

Re: OAS reforms badly needed, Opinion, Feb. 2.

The intense dialogue resulting from Stephen Harper’s Davos comments seem to swirl around the baby boomers and their imminent en masse retirement.

There is no doubt that Old Age Security will have to be overhauled if any kind of state pension system is to survive the next two decades; however, OAS itself is only one of the problems regarding pensions facing society in the very near future.

We only have to look south a short distance to discover that many U.S. municipalities are going broke right now primarily due to the unrealistic pension programs they have put in place over the last several years.

To offer any kind of employee a guaranteed pension in today’s economic climate is ludicrous, yet this is still happening and various levels of government are being forced to take what would normally be considered as unacceptable steps to combat their problems.

Even the unpopular actions of reducing staff, services and outsourcing are not going to solve these problems as long as such a disproportionate amount of municipal income is earmarked for these overgenerous pension payouts and the evil day of Canadian town/city/regional bankruptcy is merely being postponed.

Perhaps municial governments should look to major surgery rather than their current Band-Aid approach and take a leaf out of the private sector’s playbook by switching their plans from defined benefit to defined contribution.

Under the defined contribution system, retirees are responsible for their own investments and the resulting income.

The major benefit to the employer is that while contributions remain the same as those to the existing defined benefits plan, once an employee leaves or retires the employer has no further responsibility for their income.

Admittedly, while an action of this sort is not going to be remotely popular with any government empolyees it will put them on the same basis as the rest of us and while finding the money to set this up initially may be difficult for an over-leveraged municipality or even a province, it could come under the classification of short-term pain for long term gain.

Once we have started a rationalization program with regard to OAS and various other levels of governmental pension benefits, perhaps we should also take a look at the unbelievably unrealistic retirement benefits our elected politicians have voted themselves.

After all, do we not enjoy a government of the people by the people? Politicians are also people, aren’t they?

Garry Bradford

Nanaimo