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Home My WebLink AboutThe Goderich Signal-Star, 1978-09-14, Page 23PAGE 4A—GODERICH SIGNAL -STAR, THURSDAY, SEPTEMBER 14, 1978 Pension plans big concern BY JACK RIDDELL, M.P.P. My colleagues and I, in the Liberal Party, are committed to free en- terprise 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 enterprise economy. In this connection, we are very concerned about the situation with respect to pension plans in Canada. Stuart Smith has compared the financial status of these plans to a ticking timebomb, the eveDtual- explosion of which would have devastating effects for corporations, govern- ments and hundreds of thousands of pensioners. Indications are that the Canada Pension Plan and many private plans are in danger of., going- - broke, because the level of benefits paid out has been allowed ' to the much faster than the level of contributions; Even two years ago, a survey of some 100 Canadian corporations revealed unfunded pension liabilities of $930 million. Rapidly escalating salaries in the last decade have sharply increased the debts of most pension plans,, whichcalculate benefits on a percentage of an etnployee's top earning years or career average earnings. Claims on pension plans- are now far greater than most actuaries predicted when contribution schedules were established. Unless pension plan financial imbalances are resolved quickly, hundreds of thousands of working Canadians - will ' riot be able to collect a cent from pension plans to which they have contributed. For the Canada Pen- sion Plan, the break-even point will be reached in five years - 1983. At that point, the plan will be paying out more in current benefits than is received 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 present owe their civil service pension plans a total of $10 billion, and, Ari addition, they are in debt to the Canada Pension Plan by more than $12 billion... As for the private plans, whose combined assets total about $24 billion, in- credibly, no one has yet done 'a comprehensive check on how far short they are of being able to, pay the benefits they're committed to pay." Problems are com- pounded by the fact that the number of elderly people in. Canada will double in the next 13 years. That same post- war "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 pen- sioners. Lowering the mandatory age of retirement from the present 65 would create further difficulties. The impending pension crisis will also have an effect upon business and government. Companies are obliged to make up any sh tfall in their private pension plans, and the liability can "be enormous. Of Canadian companies surveyed by the Financial Executives Institute, nearly 20 per cent of those with pension Turn to page 5A s SAVE ZaE Orange Pekoe RED ROSE TEA BAGS Case of 24, 10 fl -oz tins . Our Reg. Price 2.05 All prices shown in this ad guaranteed effective through Saturday, September 16th, 1978 at the A&P Storeslistedin this ad only. 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