The Third Rail: More Pension Dialogue

Examining our current construct around pensions is not unique to Canada. However recent federal and provincial conversations have heated up the debate about pension reform in this country and will likely become one of the top issues in elections upcoming in the next year or two.

In the Planet Longevity Blog Pension Tension (Feb.16),  Marie Howes offered her commentary and Book Review of The Third Rail by Jim Leech and Jacquie McNish (2013). How timely this is now we’re in the lead up to income tax season; and next to the Winter Olympics, everywhere we’ve turned in the last few weeks the advertising for financial planning products with the push for retirement savings contributions and debt management services has filled up media space.

The Third Rail is a must read for all Canadians. To stimulate your thinking on the subject of pensions and perhaps contribute to the dialogue read these links.

Mark Venning


Pension Tension

Commentary and Book Review of The Third Rail by Jim Leech and Jacquie McNish (2013).

Pension plans exist for three basic reasons.  Firstly, pensions ensure an on-going source of income  for people who no longer earn income from employment.  Secondly, pensions provide an income based on a person’s pre-retirement level of income. Thirdly, for those who have had very little income during their working lives, or who have been unable to work, pensions of various types sustain them for the rest of their lives. There is therefore an element of “fairness” in pensions.

Jim Leech, former CEO of the Ontario Teachers’ Pension Plan, and business journalist Jacquie McNish, have written “The Third Rail”, Confronting our Pension Failures.  It should be required reading for every Canadian (and Canadian politicians).  Given the pension disaster which looms for Canadians, younger citizens – the `spectator` generation in particular, should be reading this  book and becoming outraged activists.  If they don’t, they will be saddled with impossibly high taxes to sustain the unrealistic pension promises made to the huge Boomer Generation.  They will also see education and health services for their children undercut by Boomer demands.

The book examines three important case studies. The pension crises of New Brunswick, Rhode Island and The Netherlands, show why and how unsustainable pension plans MUST and CAN be re-worked. The achievable objective is to give pensioners reasonable financial security without bankrupting younger taxpayers.

Pensions are a battleground where private interests and the public interest intersect.

The private interest is essentially the business community which does not want to incur what it considers expensive, uncertain costs to doing business. Individual citizens may also object to giving a “free pass” to those who have saved nothing for their own retirement. 

The public interest is society’s desire to help by providing an underpinning of security for those who have worked all their lives. We also want to ensure that those less fortunate can age with dignity and a reasonable amount of disposable income to meet their expenses.

Next: Why pensions divide us…..and why that must change.

Marie Howes