TORONTO (THE TORONTO STAR), June 26, 2005:
Tony Keller, visiting fellow at University of Toronto Faculty of Law, says younger generation simply cannot afford to support retired baby boomers.
Thank you, Dalton McGuinty. By ending mandatory retirement, the Premier has done me and everyone under the age of 40 a big favour. I mean it. Unless more Baby Boomers stay in their jobs well into their 60s, my generation and the next stand a very good chance of being crushed in a vice: caught between falling economic growth, as the relative size of the workforce shrinks, and rising taxes, to pay the medical and other bills for all those retirees.
You've heard the human rights arguments for ending mandatory retirement: Why force people out, just because their union and employer reached a collective agreement decades ago? Folks don't abruptly lose their marbles when they hit 65. The Prime Minister will be 67 this summer. Four of nine justices on the Supreme Court of Canada get the seniors' discount. Jane Jacobs just wrote another best-selling book and she's 89.
But the most compelling argument against mandatory retirement is an economic one. We younger people need you older people to stay productive, at least for a few more years. We can't afford to support all of you. We're going to need a little help.
The good news is that Canadians are living longer and retiring earlier. That's also the bad news. Back in the 1960s, there were six workers for each retiree. Today, there are four workers per retiree. In 2030, the ratio will be only 2:1. You don't have to be an actuary to see where this is going. In the 1960s, life expectancy for a Canadian male was 68 years and the median retirement age was 65. Today, the average male can expect to live almost a decade longer, to 77. But the median retirement age for Canadian men has dropped to 63. For women, it's 61. For public sector employees, it's 60.
In principle, there's nothing wrong with any of this. In principle, it's wonderful. It's just that, like a winter in Palm Beach, somebody has to pay for it. The Baby Boomers are partly paying for their own retirements, through Canada Pension Plan premiums. Today's premiums are being used to build up a multi-hundred billion dollar surplus. That surplus, and not the taxpayers of the future, will pay tomorrow's CPP pensions.
It's a start, but it's only a small piece of the puzzle. The other parts of the federal retirement system — Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) — are entirely paid for by taxpayers.
According to a 2002 report by the Superintendant of Financial Institutions, Old Age Security expenditures are likely to rise from $19.5 billion in 2001 to $89.5 billion in 2030. Guarenteed Income Supplement payments are expected to grow from $5.3 billion to $18 billion. When there are only two taxpayers for each retiree, those costs are going to be very heavy indeed. And I haven't even mentioned exploding health-care costs.
Surveys show that there are many seniors who want to keep working. It was pressure from them, not the business community, that finally got Ontario to scrap mandatory retirement. But even after it's gone, we'll still be punishing seniors who are employed and rewarding those who take early retirement.
For example, until the mid-1980s, you had to wait until 65 to collect CPP. Today, beginning at age 60, you are essentially entitled to a full pension, reduced only to account for age. And if you want that early retirement pension, the federal government says you must have "substantially or completely" stopped working — another incentive to leave your job. On the other hand, if you work past 65, your eventual CPP pension will increase by only 0.5 per cent per month, and only up to age 69.
Then there's the clawback on your OAS pension: earn more than $60,000 dollars a year after age 65, and you'll be hit with a double tax. Again, that's rewarding seniors who leave the labour force and punishing those who remain.
For the sake of human rights, let seniors keep working if they want to. And for the sake of my taxes and yours, let's stop encouraging early retirement, and stop penalizing those who remain employed after 65. Many want to work for a few more years, and we need them to.
Copyright Toronto Star Newspapers Limited.
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