The Brussels Post, 1978-09-20, Page 7BRUSSELS
ONTARIO
' •
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THE BRUSSELS POST, SEPTEMBER, 20, 1978 — 7
Pension plans may be broke
pension fund surpluses
which end in 1982. Not only
must we readjust ex-
penditure patterns to avoid
raiding the capital markets,
but beginning in 1987 we
must, in addition, find
hundreds, of millions of dot-
lags every rar till the end of
the century in order to repay
our borrowings- from public
pension plans. Even this
year, we must repay $175
million; our annual repay-
ment will rise to $701 million
in 1987, and to more than $1
billion in 1997.
We can no longer ignore
the pension "timebomr.
Moreover, workers who are
contributing benefits in the
belief that they are ensuring
adequate retirement incomes
By Jack Riddell, M.P.P.
My colleagues and I, in the
Liberal Party are committed
to free enterprise and to
ensuring a strong corporate
sector in the years ahead, at
the same time protecting the
futures of the people who
work within our free .enter-
prise economy. In this con-
nection, we are very con-
cerned about the situation
with respect to pension plans
in Canada. Stuart Smith has
co.rnpared ,the financial status
of these plans to a ticking
timebomb, the eventual ex-
plosion of which would have
devastating effects for cor-
porations, governments and
hundreds of thousands of
pensioners.
Indications are that the
Canada Pension Plan and
many private plans are in
danger of going broke, be-
cause the level of benefits
paid out has been allowed to
rise much faster than the-
level of contributions. Even
two years ago, a survey of
some 100 Canadian cor-
porations revealed unfunded
pension liabilities of $930
million.
Rapidly escalating salaries
in the last decade have
sharply increased the debts
of most pension plans, which
calculate benefits on a per-
centage of an employee's top
earning years or career
average earnings. Cla ims
on pension plans are now far
greater than most actu aries
predicted when contribution
schedules were established.
Unless pension plan financial
imbalances are resolved
quickly, hundreds of
thousands of working
Canadians will not be able to
collect a cent from pension
plans to which they have
contributed.
For the Canada Pension
Plan, the break-even point
will be reached in 5 years -
1983. At that point, the plan •
wil be paying out more in
current benefits than is re-
ceived in premiums. The .
surpluses of past years will
be exhausted by the end of
the century, approximately,
and unless contributions are
greatly increased before that
time, the Canada Pension
Plan will go broke. To quote
Canadian Business
magazine, "The mounting
deficits are staggering:
Canada's provinces at pre-
sent owe their civil service
pension plans a total of•$10
billion, and in addition, they
are in debt to the Canada
Pension Plan by more than
$12 billion . . .As for the
private plans, whose com-
bined assets total about $24
billion, incredibly, no one
has yet 'done a comprehen-
sive check on how far short
they are of being able to pay
the benefits they're commit-
ted to pay,"
Problems are compounded.
by the fact that the number
of elderly people in Canada
will double in the next
thirteen years, That same-
postwar "Baby boom",
which has moved like a tidal
wave through our school
system is now entering the
workforce: inevitably, it will
have an impact on the:
pension plans, as the post-
.war "babies" become senior
citizens, and fewer and fewer
workers support more and
more pensioners. LoWering
the mandatory age of retire-
ment from the present 65
would create further dif-
ficulties.
The itivending pension
crisis will also have an effect
upOn business and govern-
ment. Companies are obliged
to make up any shortfall in
their private pension plans,
and the liabflity can be
enormous. Of Canadian
companies surve yed by the
Financial Executives In-
stitute, nearly 20 per cent of
those with pension plan
shortfalls face liabilities
amounting to more than one
year's after-tax earnings.
Dwindling pension funds
will have considerable im-
pact on the Government of
Ontario, whose recent en-
ormous spending deficits
have been financed almost
entirely by borrowing • from
All pension, rights should plan throughout his career,
become fully portable. At but isnow often left with no
present, in many cases , employer pensionploye rshutsbenefitsw d 0 whenn. his
people who leave their em- 1 m
ployment before age 45, or If the impending pension
with less than ten years crisis is to be averted, we
service, lose their pension must plan and act now,
rights and are refunded only without delay. Otherwise,
their contributions, plus in- several .million Canadians
,terest. In addition, protection will find that after a lifetime
should be provided for ,the of contributions, they are
senior worker who has con- unable to collect their pen-
tirbuted to a private pension 1 sion benefits.
AAMMMM -- .4MM MNIIMMMMMMMMMMMM 1111411/111.111,1011.1.411.0111P1 RAI IW MMMM RAMIRMI1111.•
IF YOU GO SHOPPING
WITHOUT
FIRST READING
pension plans must be re- l* Brussels Post ctified. Every company with
unfunded pension liabilities
should reveal the full -extent
of - those liabilities in their
financial state ments, and
every company with un-
funded pension liabilities
should be required to declare
the means by which those
liabilities will be met. In-
vestors have a right to know
of these claims on the
company's future profits and
working people have a right
to know
There should be im-
mediate vesting of pension
rights for . all workers who
contribute to private plans.
Beat
the Sales Tax
increase
on Oct. 8
9'/8 %
9 5 /8
NOTICE
Now Paying a High Rate of
Guaranteed Trust
Certificates
for 5 Year Term
Annually or Compound
Monthly, Semi-Compound
If You can not come to the office we will call at your home.
The Company is a member of the Canada Deposit
Insurance Corporation.
must be told the truth about isHED
the impending crisis. The "1
ESTA,B8Ln
imbalance between benefits CI)
and contributions in public X
YOU'RE
LOSING MONEY
AND TIME
WE NOW HAVE GIFTS SPECIALLY
PRICED FOR KIDS TO GIVE TO MOM &
DAD.
Control
Your Own
Weather
Wall
Plaques
Paragon china
Trinkets $5 '95
China
RONNENBERG INSURANCE
AGENCY
Monkton Office Open
Monday thru Saturday
Phone 347-2241,
THIS IS IT !
THAT'S WHAT YOU'LL SAY
1111111E11 YOU SEE THE BERG
HYDRO-MAN MANURE PUMP
It forces the manure from the barn, through an underground
pipe to the storage area. As the manure enters storage area
from below, the outside surface forms a crust, which retains
the important nitrogen tind.pefessium inside the pile and als0.
reduces the odor • and fly problen. And the manure is rea dy
for spreading, when you want
ifor details call
ICeltI1 Meiji*
Pholiblet Fat.
ItolL4, WAN* thitiiris
Plait 34S-2734
Brussels Office Open
Tuesdays & Fridays
Phone 887-6663
Where'Personal Service is still Important,-
Member BBA BRUSSELS 887-9000
Open Friday Night Until 9
MAYER'S JEWELLERY Install a Westinghouse