Bill Curry of the Globe and Mail reports, Ottawa looks abroad for OAS pen­sion solu­tions:

The Con­ser­v­a­tive gov­ern­ment is look­ing abroad to find the best way to phase in a higher qual­i­fy­ing age for Old Age Security.

Human Resources Min­is­ter Diane Fin­ley argued Sun­day that Canada is one of the only coun­tries in the 34-member Orga­ni­za­tion for Eco­nomic Co-operation and Devel­op­ment that isn’t already rais­ing their retire­ment age.

Ms. Fin­ley was asked directly on CTV’s Ques­tion Period whether the government’s plans would see Cana­di­ans hav­ing to wait until age 67 – rather than the cur­rent 65 – in order to qual­ify for Old Age Security.

“That’s one option. But let’s look at it. It used to be peo­ple were expected to have a life expectancy [of] between 68 and 71. Now it’s 81, and they’re still expect­ing to retire at the same age,” Ms. Fin­ley said. “Almost all of the other coun­tries in the OECD have already moved in this direc­tion. The U.S. started doing this a lit­tle close to 20 years ago.”

Ms. Fin­ley, 54, con­tin­ued the government’s prac­tice of offer­ing hints at the government’s pen­sion reform plans with­out specif­i­cally spelling out when the change would take effect or what it will involve.

“What I’m say­ing is that in terms of imple­ment­ing it, we’re not going to tell peo­ple that they have to adapt within two years to a dra­mat­i­cally dif­fer­ent model. … We’re going to make sure that peo­ple my age and younger have time to adjust their retire­ment plans,” she said.

Alice Wong, the Min­is­ter of State for Seniors, told the House of Com­mons last week that more infor­ma­tion on the changes will be in the 2012 bud­get. The date of the bud­get has not been announced.

One heavy­weight that stepped into this debate is the Bank of Canada's for­mer gov­er­nor, David Dodge, who hopes Harper steps up on pen­sion reform:

When it comes to pen­sion reform, David Dodge has seen this movie before – twice – but he hopes it ends dif­fer­ently this time.

Prime Min­is­ter Stephen Harper has refused to answer repeated ques­tions in the House as to whether he is plan­ning to raise the eli­gi­bil­ity age for Old Age Secu­rity to 67 from 65, lead­ing oppo­si­tion par­ties to howl that he is refus­ing to come clean.

How­ever, Mr. Dodge – the for­mer gov­er­nor of the Bank of Canada who was deputy min­is­ter at the Finance Depart­ment dur­ing the deficit-slashing mid-1990s – hopes the gov­ern­ment does just that. More­over, in an inter­view Fri­day, Mr. Dodge sug­gested Mr. Harper should take advan­tage of his major­ity gov­ern­ment and even raise the age for the Canada Pen­sion Plan, some­thing other gov­ern­ments have shied away from, and which the cur­rent Con­ser­v­a­tives say is not on the table and not necessary.

“At least since the mid-1980s we’ve known we were going to have to do some­thing,” he said. “We knew that back in ‘97 when we did the revi­sions of the CPP. At the time the deci­sion was we were doing so much to fix that adding one more layer – i.e. the grad­ual increas­ing of the age – was prob­a­bly too much to bear. So, we didn’t do it, although we cer­tainly talked about it, and the finance min­is­ter and offi­cials at the time talked about it and real­ized we really should do it. But we didn’t because we were doing so much else.”

“So, quite frankly,” he con­tin­ued, “we’re at least 15 years late in get­ting started in rais­ing that age of enti­tle­ment for CPP, OAS and the nor­mal expec­ta­tion as to how long peo­ple would work in the pri­vate sec­tor with private-sector pen­sion plans. That’s absolutely clear, and because labour par­tic­i­pa­tion rates will start to fall later this decade, we’re up against the wall. It would have been a lot bet­ter if we’d done things in 97, it would have been even bet­ter if we had done things in 85 when we first looked at this under the Mul­roney gov­ern­ment, because you need a long phase-in.”

David Dodge is right, time to get on with pen­sion reform. But it's more press­ing than just rais­ing the retire­ment age. We need a 'rad­i­cal rethink' of our pen­sion sys­tem which I already alluded to when I went over Prime Min­is­ter Harper's speech at Davos:

• Increase the retire­ment age to 67 (peo­ple are liv­ing longer; some econ­o­mists think we need to raise the retire­ment age to 70)
• Review cost-of-living adjust­ments (COLAs) and cut when necessary
• Scrap all pri­vate com­pa­nies' defined-benefit plans and con­sol­i­date them into a few large pub­lic defined-benefit (DB) pen­sion funds. Com­pa­nies should focus on pro­duc­ing goods and ser­vices, not man­ag­ing pensions.
• Con­sol­i­date all munic­i­pal and city pen­sion plans into large pub­lic DB plans
• Con­sol­i­date all Crown cor­po­ra­tions DB plans into one large DB plan
• Expand CPP to all Cana­di­ans and get the fund­ing right
• Cap CPPIB and all large pub­lic DB plans at a cer­tain size and cre­ate new ones as needs arise
• Make pen­sions portable so no mat­ter where peo­ple work, their pen­sions are safe, secure, well man­aged and will fol­low them
• Last but not least, get the gov­er­nance right and improve it con­tin­u­ously.

Cana­di­ans whin­ing over an increase in retire­ment age are wrong but so are oth­ers who think that this is the only adjust­ment needed to bol­ster pensions.

Let me be more blunt: we need to get our col­lec­tive heads out of our a*&es, stop fear mon­ger­ing, stop ped­dling to inter­ests groups, and start get­ting on with some seri­ous pen­sion reform which intro­duces com­mon sense mea­sures and builds on the suc­cess of our large defined ben­e­fit plans.

I'm tired of watch­ing inter­ests groups from all sides of the polit­i­cal spec­trum cry, scream, bitch and whine about pen­sion reform. Wake up already, look what's going on in Europe, espe­cially in Greece where par­ti­san pol­i­tics has destroyed the coun­try. Hav­ing escaped the car­nage that has rocked other nations, we've been lucky in Canada, but our good for­tune could change at any time and we bet­ter be prepared.

Finally, don't be scared of work­ing past 65. Work is good for you, it's healthy. It keeps your mind young and sharp. I see my 80 year old father work­ing 10 hour days as a psy­chi­a­trist and he never com­plains. Admit­tedly, he's lucky, he's healthy, loves his job, his col­leagues, and feels good help­ing men­tally ill patients. Wish more Cana­di­ans had his atti­tude when it comes to work. Below, Cana­dian politi­cians doing what they do best, scream­ing at each other. Absolutely pathetic.

Leo Kolivakis is an independent analyst with a Master’s in Economics from McGill University and over ten years experience in the buy and sell-side. He was a senior investment analyst at two of the largest public pension funds in Canada, the Caisse de dépôt et placement du Québec (Caisse) and the Public Sector Pension Investment Board (PSP Investments), where he researched, recommended and invested in traditional and non-traditional asset classes like stocks, bonds, foreign exchange, hedge funds, private equity, infrastructure, commodities and timberland. In 2007, He completed a detailed report for the Treasury Board Secretariat of Canada on the governance of the Public Service Pension Plan. On April 21st, 2009, He was invited to speak at the Standing Committee on Finance on pensions. Feel free to contact me at lkolivakis@gmail.com for specialized consulting mandates on pension investments, or if you have any other inquiries or comments. Read more from the author/contributor here.

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