Emily Niles | CUPE Staff
Marnie Thorp | CUPE Staff
The Canadian model of retirement security is like a “three-legged stool”. The key being: you need all three legs for the stool to be secure. Two of the pension legs, Old Age Security (OAS) and the Canada Pension Plan (CPP) are public. But the system was designed so that these two public pension programs on their own are insufficient.
The Government of Canada counts on workers having a workplace pension plan in order to have a decent standard of living in retirement. Yet 60% of workers do not have access to a workplace pension plan.
In fact, at no point in history has a majority of workers had access to a pension benefit that is more than the modest public programs.
Old Age Security (OAS) is the basic universal public pension program for Canadian citizens and residents. We all contribute to OAS; it is funded through general taxation. Low-income seniors may also receive a Guaranteed Income Supplement (GIS) top-up. But an OAS/GIS pension alone does not keep people out of poverty.
The Canada Pension Plan (CPP) provides a lifetime pension to retirees who worked in Canada and made CPP contributions. CPP is funded equally by contributions from employers and from workers, in the form of payroll deductions. The value of our CPP in retirement depends on our earnings throughout our working life.
An average couple, with an average CPP benefit plus OAS/GIS would have a maximum annual income from the federal public programs of just under $35,000 per year starting at age 65. This is more than $2,600 below what Statistics Canada considers to be the low-income measure for a two-person household.
Retired CUPE 786 member Linda Clayborne, who worked as a registered practical nurse from 1975 to 2016 in Ontario’s health care system, is well aware of the shortcomings of the public plans. “If you look at what you get from Old Age Security and the Canada Pension Plan, how do you survive on that?” she asks. “Especially today, with inflation. It’s unreasonable.”
The inadequacy of OAS and CPP creates a need for workplace pension plans. But even though the Canadian public pension system is inadequate by design, there is no legal requirement that employers must provide their workers with a pension plan. And the types of workplace plans that do exist vary, ranging from more secure defined benefit plans to less adequate defined contribution plans.
Clayborne, who receives a pension from the Healthcare of Ontario Pension Plan (HOOPP), recognizes its importance. “Honestly, I thank God all the time that I have a pension plan,” she says. “I worked for 42 years and I receive a pension of about $2,600 a month, plus the public pensions. It is a far cry from the $1,253 I would get if I didn’t have the HOOPP pension!”
Where there are workplace pension plans, such as HOOPP, it is because unions have fought for and safeguarded them. Approximately 76% of unionized workers are members of a workplace pension plan, compared to only 28% of non-unionized workers. Workplace pension plan coverage is more prevalent in the public sector, which is more densely unionized. Pension coverage in the private sector has fallen as unionization has fallen. Without unions, there wouldn’t be a workplace pension system in Canada.
In addition, temporary, part-time, and low-wage earners are much less likely to have a pension. These workers are also disproportionately workers of colour, Indigenous workers and workers with disabilities. The voluntary nature of workplace pension plans extends the inequality in the labour market by perpetuating precarity in elder years.
Many CUPE members and their families are members of their workplace pension plans for many decades. Often this spans nearly 70 years, when accounting for contributing years and retirement. Their pension is also often the biggest asset in their life, sometimes even more valuable than their house.
Canada’s retirement income system relies on and expects workplace pensions and/or individual private savings to bridge the needs gap left by an inadequate public pension system. For over a decade, CUPE locals in regions across Canada have been fighting to maintain the pension benefit we have, and fend off cuts or conversions. CUPE also continues efforts to expand workplace pension coverage through collective bargaining.
The labour movement is workers’ best advocate for a dignified and secure retirement for all.
We need to remain committed to improving public pension coverage to raise the floor for everyone. Old Age Security, collectively funded through taxation and near-universal, is one of the only public programs that embodies a progressive, trade union approach to retirement security. But it isn’t enough to make ends meet, even with the recent 10% boost at age 75 — far too late for many working class retirees who need immediate support.
We have a collective, public responsibility to care for seniors by ensuring decent standards of living. After a lifetime of work in this country, people should be able to retire with security and dignity and not fall into poverty.
“I think there needs to be some education done on pensions and how important they are,” Linda Clayborne remarks. “So few people have a pension now that I don’t know if our members recognize how incredibly lucky they are if they have a pension. Pensions are all we have. They are the most important benefit we have in our work life.”