Don’t Take Away MY Defined Benefit Pension!
File this one under “painfully ironic”:
The Ontario Securities Commission (public agency charged with monitoring the behaviour of the stock market industry) recently advertized for a Senior Economist. Duties include collecting & interpreting data, monitoring developments in securities markets, helping Commission staff understand economic concepts, blah blah blah.
The fun part is the compensation: competitive salary, benefits, and — here’s the best part — A DEFINED BENEFIT PENSION PLAN!
Now that’s sweet.
These are the folks supposedly making sure that the measly RRSP investments of Canadians are safeguarded from the sorts of speculative abuse that have brought down so much of the world’s economy. They are the supposed guardians of the paper casino in which so much of our social infrastructure (RRSPs, RESPs, TFSAs, etc.) has been invested. They have failed miserably (though the market meltdown, of course, reflects a much bigger failure of policy & regulation than just the securities regulators).
Yet, at the end of the day, meltdown or no meltdown , they’ll get their defined pension benefit. They know that it’s a big mistake to trust your retirement future to the random gyrations of defined-contribution (or RRSP-style) pensions.
Hey, if it’s good enough for the hard-working staff of the OSC, it’s good enough for the workers. We ALL deserve the basic pension security that should be delivered by DB pensions (backed up, perferably, by a foundation of strong universal public pension benefits and a viable system of pension regulations).Â
Forget RRSPs, forget the stock markets. Just gimme my pension.
At the end of the day, pensions don’t depend on the stock market. They depend on the ability of the real economy to produce enough wealth, a share of which is allocated (one way or another) to support our elders. When you buy into an RRSP, you aren’t planting an apple tree — the fruit from which you will harvest after you retire. Rather, you are speculating on paper assets, in hopes that (indirectly) the future value of those assets will entitle you to a great share of the apples that the future economy will produce anyway. Let’s get away from the hocus-pocus of stock market-based pension funding. Let’s just commit that we’ll collectively devote a fair share of the future output of our economy to the retriees who helped to build that economy.
I would equate this to carpenters who refuse to own houses. Which actually makes sense. If, several times in your career, you leave a city where the housing market is down and move into a city where the housing market is thriving, you will routinely sell low and buy high. In this case it’s better to rent.
Another comparison would be putting all your money into the company’s stock purchase plan. If the company tanks, you lose your money AND your savings.
So if you’re a finance-oriented economist considering various jobs, the last thing you want is for your income and your pension to both go up and down with the market. Even if you like the stock market.
Let’s get away from the hocus-pocus of stock market-based pension funding. Let’s just commit that we’ll collectively devote a fair share of the future output of our economy to the retriees who helped to build that economy.
Commitment, sure. Follow through, not so much. It should be noticed that at least of federally reguulated private DB pension plans have had funding gaps for several years now. Obviously those shortfalls will now be growing.
It’s all well and good to commit to a production-based DB pension plan, but that doesn’t mean the employers will actually follow through over the long term.
I am with your sentiment 100%, I just don’t think it’s a full solution by any means.
The CPP still appears to be doing pretty well, though. At least we have that, right?
Half. At least half of federally regulated pension plans, I meant to say, have funding shortfalls.