Arthur,
At 21:38 22/10/2009 -0400, you wrote:
Yet one more sign of the declining middle class. Like the financial
bubble someone will wonder how did we ever let this happen. Why did we go
back to a two tier society?
But we've never really left a two tier society ever since the birth of
cities 10,000 years ago! As the land-owning aristocracy (together with
their religious associates) became enfeebled with the beginnings of the
Industrial Revolution they were infused with (and then taken over by) a new
engineering and professional class rising up from the bottom. Now a
century-and-a-half old, this class is now being infused and overtaken in
its turn by a new scientific class (working within finance, communications
and, more recently, genetics) which is re-creating -- now for the third
time -- the same old wealth and power divide.
Keith
From: Ed Weick [mailto:[email protected]]
Sent: Thursday, October 22, 2009 4:10 PM
To: [email protected]
Subject: Pensions
One of the more disturbing things going on in Ottawa currently is the
plight of Nortel retirees. About 4,000 of them were up on Parliament Hill
yesterday trying to get the federal government to do something about their
lost pensions.
If I understand matters correctly, the pensions are being affected by two
things. One is that Nortel is currently undergoing bankruptcy proceedings
and in such proceedings the obligations of a company to its employees
typically gets shoved to the back of the line. Other creditors come first.
The other is that the Nortel pension plan consists of a seperately
admnistered investment fund into which both the employers and the
employees paid regular sums of money. This fund was hit hard in the
recent economic downturn, so much so that Nortel is in a position to pay
its retirees only about 60 percent of what it owes them. An ex-employee
who was supposed to get, say, $50,000 a year after thirty years of work
will only get about $30,000. Many others will probably get a lot
less. There isn't much that Nortel can do about it because it's bankrupt,
broke and being sold off piece by piece.
The Globe & Mail is currently running a series on the state of pensions in
Canada now. One of the articles in the series contained the following
statistics:
* 17.6 million: Number of people in the Canadian work force.
* 11 million: Number of Canadian workers without pension plans.
* 4 million: Number of those workers with registered retirement
savings plans.
* 10,000: Number of pension plans in Canada.
* 4.5 million: Workers with pension plans who have defined benefit
plans that guarantee the pension income of retirees until they die.
* 55 per cent: Amount of those plans held by public sector employees.
* $25,000: Average pension per year.
(Source: Infometrica, University of Toronto professor Keith Ambachtsheer)
Pension plans are of two general types. In Defined Contribution plans,
the employer contributes but the employee must decide how the contribution
plus part of his or her own income is invested. In Defined Benefits
plans, the employer establishes an investment fund to which it and the
employee contribute. The Nortel plan was of this type.
Another G&M article - which I can't find right now - contained a chart
which showed a substantial decline in the percentage of working Canadian
with pension plans over the past thirty or so years.
What the G&M series suggests is a general weakening of the means by which
workers will be able to look after themselves when they retire. From the
numbers above, most do not have pension plans of any kind. What is
particularly worrying in this regard is that the population is aging,
meaning a growing number of people unable to support themselves because of
an inadequate income. They will have income from the CPP and OAS, but
even with these incomes will still be at the poverty level. Many will
have to work, or try to, into old age.
What is also worrying is a change in the way in which workers are
treated. An increasing proportion of those employed are now "associates"
and not emplyees, meaning that they don't have access to many of the
benefits workers traditionally had, including pension funds.
I'm not sure of where all of this is taking us, but it does suggest that
we are moving into a less secure future -- perhaps far less secure.
Ed
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Keith Hudson, Bath, England, <www.evolutionary-economics.org>,
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