Zurich Citizens News, 1978-09-14, Page 111.11111111111111111111
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By JACK RIDDELL
MPP Huron -Middlesex
My colleagues and I, in the
Liberal Party are com-
mitted to free enterprise
and to ensuring a strong cor-
porate 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 situa-
tion with respect to pension
plans in Canada. Stuart
Smith has compared the
financial status of these
plans to a ticking timebomb,
the eventual explosion 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,
because 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 percentage of an
employee's top earning
years or career average ear-
nings. Claims on pension
plans are now far greater
than most actuaries
predicted when contribution.
schedules were established.
Unless pension plan finan-
cial 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
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 Pen-
sion 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, in addition, they are in
debt to the Canada Pension
Plan by more than $12
Becker reunion
The annual reunion of the
late Wm Becker family was
held on Saturday September
9, 1978 at the Dashwood
Community Centre with 46
members present.
Members were present
from Toronto, Waterloo,
New Hamburg, Stratford,
London, Ailsa Craig, Huron
Park, Exeter, Crediton and
Dashwood.
The 1979 reunion will be
held, at the same place,
Saturday September 22.
'DhII KINGM4DIUVING,
DISASTERtaitetia
Citizens News, September 14, 1978
Page 11
Express concern over plans
billion ... As for the private
plans, whose combined
assets total about $24 billion,
incredibly, 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 thirteen years. That
same post-war "baby
boom", which has moved
like a tidal wave through our
school system is now enter-
ing the workforce: in-
evitably, it will have an im;
pact 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 man-
datory 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
shortfall in their private
pension plans, and the
liability can be enormous.
Of Canadian companies sur-
veyed by the Financial Ex-
ecutives Institute, nearly 20
percent of those with pen-
sion plan shortfalls face
liabilities amounting to
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1
1
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more than one year's after-
tax earnings,
Dwindling pension funds
will have considerable im-
pact on the Government of
Ontario, whose recent enor-
mous spending deficits have
been financed almost entire-
ly by borrowing from pen-
sion fund surpluses - which
end in 1982.
Not only must we readjust
expenditure patterns to
avoid raiding the capital
markets, but beginning in
1987 we must, in addition,
find hundreds of millions of
dollars every year 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 an-
nual repayment will rise to
$701 million in 1987, and to
more than $1 billion in 1997.
We can no longer ignore
the pension "timebomb".
Moreover, workers who are
contributing benefits in the
belief that they are ensuring
adequate retirement in-
comes must be told the truth
about the impending crisis.
The imbalance between
benefits and contributions in
public pension plans must be
rectified.
Every company with un-
funded pension liabilities
should reveal the full extent
of those liabilities in their
financial statements, and
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Rates.
every company with un-
funded pension liabilities
should be required 'to
declare the means by which
those liabilities will be met.
Investors have a right to
know of these claims on the
company's future profits
and working people have a
right to know the status of
their promised retirement
incomes.
There should be im-
mediate vesting of pension
rights for all workers who
contribute to private plans.
All pension rights should
become fully portable. At
present, in many cases, peo-
ple who leave their employ-
ment before age 45, or with
less than ten years service,
lose their pension rights and
are refunded only their con-
tributions, plus interest.
In addition, protection
should be provided for the
senior worker who has con-
tributed to a private pension
plan throughout his career,
but is now often left with no
pension benefits when his
employer shuts down,
If the impending pension
crisis is to be averted, we
must plan and act now,
without delay. Otherwise,
several million Canadians
will find that after a lifetime
of contributions, they are
unable to collect their pen-
sion benefits.
Convocation
The Board of Governors
of
The Conestoga College
of Applied Arts and Technology
invites you to attend
The Tenth Convocation
honouring all graduates of
Diploma, Certificate
and Apprenticeship Programs
Dr. David Suzuki
will give the Convocation address
Kitchener Memorial Auditorium
Saturday, 30 September, 1978
1:30 p.m.
Reception immediately following
the ceremony at the Doon Campus,
299 Doon Valley Drive, Kitchener
Conestoga. Col lege
of Applied Arts
and Technology
We've got a lotto share.