(The following article is from the August 1-31, 2009, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St., Unit 502, Hamilton, ON, L8P 2H3.)

"Labour Voices" column, by Larry Brown, National Secretary-Treasurer, reprinted from National Union of Public and General Employees (NUPGE) website

Our federal government, the uber‑specialists in spin, have spun out some changes to the Canada Pension Plan (CPP) that were described in glowing terms as enhancing fairness and allowing employees greater flexibility. One newspaper dutifully, if incorrectly, talked about a "sea change" in CPP policy.

     What the changes really mean, unpacked from the spin, is that employees in Canada that want to retire early are going to be hit hard by a further reduction in their CPP benefits, a reduction that will last the rest of their lives. And workers will be heavily induced to continue working even after reaching 65.

     It is abundantly clear that the level of CPP benefits is too low. It is equally clear that for over six million Canadians, without workplace pensions or RRSPs, the CPP is their only real source of retirement income.

     Rather than address this issue, the proposal coming from the Harper government is to tinker with the rules so that in fact CPP payouts would be driven even lower for some workers, workers with the temerity to retire earlier than 65.

     These would be disguised reductions, hidden by the fact that workers would be able to start collecting CPP at 60, and still work and make payments into the plan.

     But any employee in Canada hoping or planning to retire before 65 should know that the decrease in CPP pension payments will go from a current maximum 30% decrease at the age of 60 to a maximum 36% decrease. That is, for employees who work to 65, their pension would be 36% higher than if they were to retire at 60, a very heavy inducement indeed to keep on working.

     The 36% reduction will last the rest of their lives. This works out to an extra 6% lost for early retirement - a 16% increase in the permanent cost of early retirement.

     That's not the end of it. Workers who want to retire early will also have a heavy inducement to work at least part‑time after that. For every year they work they will get back some of that retirement penalty. And even at 65 workers will be encouraged to keep working. If they work until 70 the value of their CPP will keep increasing by an elevated amount.

     Who benefits from these changes, which are so obviously aimed at inducing most people to work until at least 65 and preferably longer? Well, some employees who want and are able to work past age 60 will appreciate the fact they'll be able to do so while collecting (greatly reduced) CPP benefits. But the biggest benefits go to employers.

     Employers will face a lot less pressure to recruit younger workers, or pay older workers a fair wage. Under either of these announced changes, from ages 60 to 70 a person can receive CPP and keep working. That employee will already be receiving a CPP payment, needing less employment income. This will benefit employers because they will feel even less inclined to pay reasonable salaries to seniors still working.

     The net effect is that seniors would be subsidizing their employers by using their CPP benefits to supplement their lower incomes. Meanwhile, the pool of workers available to employers would be considerably larger than it is now, when retirement at 60 is a reasonable option.

     No wonder the most enthusiastic endorsements of this new idea have come from employer oriented think tanks. It's a potentially lucrative gift to employers from their older employees.

     The Harper government has also cloaked these changes in the rhetoric of "responding to the current economic crisis." Yet the fact is that these changes will not occur until 2012. So how does this help people today who don't have a workplace pension, who don't have adequate CPP benefits, who don't have private retirement savings or have seen them recently hammered by the stock market meltdown?

     Some countries have openly increased their normal retirement age, allowing for public debate on the issue. In Canada, where spin is everything for our federal government, they are using CPP changes to increase the pressure on workers to stay in their jobs till at least 65, and calling it "progress, flexibility and fairness."

     Look past the spin, and the result is less employee choice about when to retire.