The predicament that Canada’s pension system currently finds itself in has all the makings of an election issue, save for one: an individual to grab it and run for the goal line, says Ontario Teachers’ Pension Plan CEO Jim Leech.
This yet-to-be-revealed pension champion become the 21st-century Tommy Douglas, who championed universal healthcare in the ’60s, said Leech at a speech to the Empire Club on May 28 at Toronto’s Royal York Hotel.
Pointing out the unprecedented media coverage of pension issues and myriad committees and reports on pension reform, Leech feels that the time is right to force the issue.
“It’s tough to find an individual or organization untouched by the pension question,” he said. “It is our view that there has never been a better time for Canada to undertake visionary pension reform than right now.”
That reform should come in the guise of a new hybrid model, he explained. Pointing to the experience of England, the Netherlands, and Australia, Leech outlined several ideas including the creation of superfunds, workplace pay-as-you-go pensions, and a national arm’s-length pension plan organization.
He repeated his call for changes to the Income Tax Act to lift the cap on surplus funding—currently set at 10%—and added that part of the blame for today’s pension mess lies with “weak-kneed managements that, out of expediency, promised unrealistic levels of future benefits in order to dampen salary demands.”
It is these two issues, Leech explained, that have contributed the most to the belief that defined benefits—widely regarded as the most effective benefit delivery vehicle—has become too expensive.
Pressed to provide a short list on possible pension champion candidates, Leech was coy, but said a politician—and not himself—would be the most likely choice.
“I’ve got a job,” he said.
As far as he can tell, the leaders of the other big pension plans more or less agree with him on the idea of reform, and together they can provide “thought leadership,” but not much else.
“The pension challenge may be the defining issue of Canada’s next federal election,” he said. “Whether or not it is depends on the courage of our pension champion, whoever he or she may be, to raise and tackle the issue responsibly.”
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