Moving toward a healthy retirement for all Ontarians
An adequate income is the key to a healthy retirement. Right now many retired Torontonians are struggling to meet their basic needs for housing, healthcare, food and security, and it’s going to get worse. Poverty among seniors has increased in recent years and among today’s working Canadians, only six in ten have put money away for their retirement. If current trends continue, the widening inequalities in the workforce will be replicated in retirement and people in less secure and lower-paying jobs in their working years will not have a chance for a healthy retirement.
Individuals who work in precarious employment and in low-income jobs their entire lives are already at a disadvantage. They have been exposed to the social conditions that drive health inequality such as poor housing and poor access to food and a healthy lifestyle. The disadvantages these people experience translate into higher rates of chronic disease, disability, and increased healthcare costs. But even middle-income workers don’t enjoy many of the advantages that their parents did: they face higher levels of precarious employment, have lower incomes, and set aside less money for retirement. With limited ability to save for retirement the gap between those with pensions through their employers – and those without – will continue to grow.
Ontario is making strides to ensure a healthy retirement for all
Ontario’s provincial government recognizes this problem and is taking a very important step to address it. Two-thirds of Ontarians do not have access to a pension plan through their employer and only contribute to the Canadian Pension Plan (CPP). The problem is that the CPP’s maximum benefit is only about $12,500 per year. For those with nothing else, federal Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), along with Ontario’s Guaranteed Annual Income System (GAINS), provide a benefit of up to about $17,000 per year for a single person. This is still well below the Federal Low Income Measure. As we have known for a long time, our current pension plans just aren’t enough; what we need is an expansion of the CPP. However, the federal government is refusing to address this growing problem.
The Ontario Retirement Pension Plan (ORPP) set to roll out in 2017 is well designed to align with the CPP, which will facilitate administration and potential future integration into the CPP. The ORPP will supplement the CPP by replacing 15% of an individual’s earnings to a maximum of $90,000 for those who do not have an employer-provided pension plan. This will help to ensure low- and middle-income Canadians have access to an adequate income in retirement, providing coverage for more than 3 million working Ontarians. On top of this, it will save money in the long run by reducing GIS and GAINS payments.
The Ontario government is making commendable progress by providing a defined benefit pension plan for Ontarians who are not otherwise covered. But from an equity perspective there are some further considerations we need to address to meet the goal of ensuring all Ontarians have the opportunity for a healthy retirement:
We need a universal pension plan
Making the ORPP mandatory for all Ontarians would ensure greater access, quality and equity. The proposed exclusion of people with current workplace plans will create a more complex administrative system and will provide lower pension levels to workers who move in and out of the system as their employment and pension type changes.
We need to define the level of income required for a healthy retirement
We need to better understand exactly how much seniors require to ensure a healthy retirement. Levels of poverty among low-income seniors – on the GIS and GAINS – have been rising in recent years, indicating that we need to take a closer look at how to design a program that keeps all seniors out of poverty. We need to agree upon a basic standard of living that all seniors should be able to have, and design our pension plan to ensure it meets this minimum. While the ORPP provides extra pension income for Ontarians who are able to contribute it does not help those at the very bottom.
We need to identify and provide other supports required for a healthy retirement
We need to look beyond income supports at what other supports the provincial and federal governments can offer, in order to ensure not only a financially secure retirement, but also one that is fulfilling and keeps seniors healthy and able to engage with their communities and families.
Ontario seniors all have access to basic medical care including coverage for prescription drugs and dental care. However, this isn’t the whole picture; low-income seniors are the most vulnerable to poor health outcomes and have the most difficulty accessing resources to help treat their conditions and prevent further deterioration. We need to think about the bundle of other services required to ensure a high quality of life for seniors, which offset their costs. Seniors have health and service costs which fall outside our health care system: services such as home care, long-term care, and co-payments for non-OHIP covered services including physiotherapy and other supports are inaccessible to many low-income seniors under the current system. Access to these services will hugely improve many seniors’ quality of life. We need to include these supports, along with further income supports, as we work toward creating a comprehensive system that provides an equitable and healthy retirement for all Ontarians.