Keeping Canadians working

With advances in healthcare and technology, the case for benefits past 65 is not as weak as it once was

Keeping Canadians working

This issue of Benefits and Pensions Monitor marks my 25th year in the pension and benefits industry. August 27, 1997, marked my first day at the magazine and September was the first issue I helped publish.

At the time, I knew nothing about pensions and just slightly more about benefits. Fifteen years before when I joined Thomson Newspapers, I was asked about joining its pension plan. At that time, I saw no need as I was going to ‘live fast, die young, and leave a good looking corpse.’

However, the knowledge I lacked about the industry was more than offset by my willingness to share my opinion. After writing at least one editorial a day for daily newspapers, I brought that to BPM where, for the most part, the editorials were promos for the articles in the issue.

Caution to the Wind

Throwing caution to the wind, I decided to share my opinions on the issues facing plan sponsors and the industry.

Some of those early editorials strike a chord with me today. Reading an Eckler ‘GroupNews’ on providing benefits for those who work past age 65 reminded me of an opinion that the lack of interest in fixing defined benefit pension plans back when I started was part of a conspiracy theory to keep Canadians working longer. Somewhere in Ottawa, a group of civil servants realized that the glut of baby boomers moving through life was going to result in labour shortages right about now. Instead of fixing DB plans, they were left as they were which, along with defined contribution plans, were one way to keep older Canadians from saving enough to retire.

And that has come to pass, thus a discussion on providing benefits for age 65+ employees.

Frankly, there is no reason why a healthy, older Canadian cannot work longer. Advances in healthcare alone are helping people live longer and healthier.

The nature of work has also changed. There is a big difference between laying bricks for 40 years and sitting at a desk typing.

The premise of Freedom 55, which most boomers grew up with, vanished long ago. They recognize and have a need to keep working and employers need the work ethic and experience they bring to the job.

Status Quo

But, as this becomes the status quo, things need to change. If we can keep working and contributing to retirement savings, do we need an arbitrary age when we have to convert an RRSP to a LIF? Why does a working Canadian have to start drawing on the Canada Pension Plan when they turn 70? Why not let them keep working and contributing until they retire and get a larger benefit? Both of these would certainly help alleviate fears of elderly Canadians not having enough to live out their days.

And it really is a short-term issue. The baby boomers will age, retire, and depart for the hereafter. What follows may not be labour shortages especially if technology and immigration provide solutions.

Indeed, the issue may turn from retirement savings to accommodating a labour force replaced by technology and automation.