OTTAWA---Critics of Canada's public pension system are engaging in scare tactics, a prominent pension expert charges. In a new study Pensions Under Attack: What's behind the push to privatize public pensions, released today by the Canadian Centre for Policy Alternatives, independent economist Monica Townson says talk of a "demographic time bomb" and inter-generational warfare over pensions are deliberate attempts to undermine public confidence in the Canada Pension Plan.
"People who want to replace the CPP with a system of individual savings accounts - whether that takes the form of mandatory private savings plans or simply allowing people to opt out of the CPP if they wish to - are clearly following their own political and ideological agenda," says Townson. "It's clear that by presenting the situation in terms of crisis and conflict," she says, "they're trying to soften up the public for radical measures allegedly designed to address the challenge of Canada's aging population."
"We should recognize these threats for what they are," says Townson. "They represent an attempt to justify reducing the role of government and eliminating collective responsibility for our aging population under the guise of preventing inter-generational conflict." Many of those who advocate privatization through individual accounts have a thinly-disguised self-interest in the outcome of this debate, Townson charges. They would like to see the mandatory contributions of workers and their employers directed to private financial markets where fees, commissions and other charges can be levied on them - reducing the portion of workers' contributions that can be used to generate a pension.
Canada has already taken action to address the concerns raised by a pay-as-you-go pension plan in the face of population aging, Townson points out. A wide range of further acceptable options is available to policy makers, if necessary, without resorting to privatization and individual accounts, she points out.
Canada's retirement income system already has a reasonable balance of public and private arrangements and it has done a good job of reducing poverty and inequality among seniors. If we are really concerned about protecting the financial security of future seniors and ensuring them an adequate income in retirement, we must resist the attack on public pensions. Our public pension system is worth fighting for, she maintains.