It is a bit stunning to discover that Jack Mintz – former head of the CD Howe Institute and now at the University of Calgary – has been appointed research director of the federal – provincial review of pensions.
Even Finance Minister Flaherty should be a bit embarassed to appoint as a “researcher” someone who is so strongly on the record as a fervent defender of individual responsibility for retirement savings and the virtues of RRSPs. And one can only scratch one’s head and wonder why the provinces would have agreed to the appointment of someone who has attacked recent provincial proposals so strongly – assuming they were asked.
According to a media release from the Department of Finance
“At their last meeting on May 25, 2009, federal, provincial and territorial finance ministers agreed to create the Research Working Group on Retirement Income Adequacy to expand the knowledge base underpinning the subject of retirement income adequacy. This group, chaired by Ted Menzies, parliamentary secretary to Minister Flaherty, and supported by research director Jack Mintz and finance ministers from British Columbia, Alberta, Manitoba, Ontario and Nova Scotia, is to report to finance ministers and ministers responsible for pensions by the end of 2009. The first meeting of this group was held on July 22, 2009, in Calgary and participants agreed to a work plan, which will culminate in a report to ministers.”
Jack Mintz is squarely on the public record as an opponent of new public pension plans, and a strong proponent of individual savings through RRSPs. In a May op ed in the National Post he specifically warned against recent provincial proposals:
Nova Scotia, Ontario, British Columbia and Alberta issued reports last year not only addressing regulatory issues but, in some cases, proposing a dangerous new idea: a government-promoted multi-employer pension plan, something akin to group RRSPs and other retirement savings vehicles, except subject to pension regulations…
From a public policy perspective, the notion that governments should set up multi-employer super-funds operated on a non-profit basis is flawed for two reasons.
By pushing for super pension funds that operate on a non-profit basis, the government is creating a non-taxable competitor who has a clear advantage over private companies such as banks and insurance companies that offer an array of similar products to enable individuals to fund their retirement benefits through RRSPs rather than defined contribution pension plans. While a non-profit pension plan might save some money in this respect, it is no different than government choosing to establish non-profit businesses in other industries, shifting resources to untaxed providers.
More worrisome is the potential implicit liability faced by governments. While the B.C. government, for example, has made it clear it has no legal responsibility towards any financial problems that might arise from a province-wide pension fund, it would likely be politically responsible. With the kind of markets we have had lately, employees close to retirement might be upset with a money-losing plan that their government helped create and expect compensation paid to the plan. Just think of provincial-sponsored pension funds as the Fannie Mae of the pension industry.