The Banks and Supplementary Public Pensions
The Canadian Bankers Association are deeply opposed to meddling with a pension system which they say is working just fine.Â Which is understandable, albeit self-serving, given their dominance of the high fee mutual fund industry and the significant profits earned on spreads between low interest GICs and bank lending. The banks do just fine out of leaving individuals without decent pension plans to fend for themselves as investors in the financial markets they dominate.
They go on to say that, if governments sponsor any new pension plans along the lines suggested by three provincial pension inquiries ,” it must be made clear that the government is not providing any guarantees with respect to portfolio balances, rate of return or income stream.”
That is deeply hypocritical, given recent federal government backstops for the banks themselves.
Under the Extraordinary Financing Framework introduced to deal with the global financial crisis, the federal government offered to swap rock solid government bonds for up to $125 Billion of bank held mortgages, and the Bank of Canada allowed the banks to borrow dollar for dollar against risky, hard to sell assets. It is inconceivable that any Canadian government would ever let a major bank fail.
I guess the message is that it is okay for the government to backstop the banks, but not the pension savings of working Canadians.