Financial security Poverty Social security

Fraser Institute pension aversion: ORPP unnecessary, according to FI. Quite necessary, according to reality.

Chart 1: Sources of incomes among the over-65s

Source: Pensions at a Glance 2013 – OECD and G20 Indicators (PDF), The Organization for Economic Cooperation and Development (OECD)

It’s like the Fraser Institute can’t help itself

Proposed Ontario pension plan unnecessary
Charles Lammam and Sean Speer, The Fraser Institute May 2, 2014

Ontario’s recent budget included the Liberals’ proposal for a mandatory government pension plan modelled after the Canada Pension Plan. The proposal, however, is largely based on the faulty assumption that most Canadians are not adequately prepared for retirement.

Who says it’s faulty? Well, certainly not the 33% of Canadians over age 55 who are concerned they do not have enough money saved for retirement, according to a recent ING Canada survey. Nor the 49% of Canadians over age 65 who remain at work because they can’t afford to retire, according to a Canadian Association of Retired Persons (CARP) survey (PDF).

Regarding the ”generous’ pension benefits provided by the Canadian government: Spending on public pensions and government retirement benefits account for only 4.5% of Canadian GDP, whereas the OECD average is 7.8% of GDP. Public transfers account for 39% of Canadian seniors’ gross income, compared to the OECD average of 59%.

Who needs actual seniors or statistics to speak to the necessity of public pension enrichment when Canadians have the Fraser Institute…


To address the seeming paradox between the relatively low Canadian government expenditure on public pensions and reported low-income incidence cited, the OECD references Low Income Measure (LIM). StatsCan recently changed its LIM methodology such that “the revised LIM produces lower estimates of low-income incidence for certain groups.” For more on Canada’s statistical poverty reduction, see Inaccurate measures of poverty: A brief Canadian history.

It’s also worth noting the reported decline in low-income incidence among Canadians age 65+ since the mid-90’s corresponds with a more than two-fold increase in their labour market participation over the same period (6.2% in 1995 to 13.1% in 2013). As the CARP survey notes, half of its members indicated their primary reason for remaining in the labour force was financial necessity.

The OECD data highlights Canada’s remarkably low public pension income share, as well as its over-reliance on capital wealth and private pensions – both disproportionately accruing to  wealthier Canadians given rising income inequality over the last three decades.

All the facts clearly suggest why more Canadians age 65+ are either working or looking for work: They increasingly can’t afford to retire.

Whether Canadians support public pension enrichment or not hinges on this question of social solidarity, of whether they find it socially acceptable to ‘incent’ seniors to continue working well past retirement age for fear of destitution.

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