2022 CPC Leadership Discussion: Et tu Redeux

[Halifax Tar]

Hmm... What could have caused a dip in life expectancy starting in 2020? What sort of public health emergency might have played a part?

Probably not the same thing that started the decline in 2016…

Point remains that while some were thinking CPP/OAS/etc will be challenged by Canadians living longer, that appears not to be a valid assumption in the out years. Maybe Canadians hit peak awesomeness a few years ago. By the stats, at least we’re a couple years longer living than our Southern neighbors, so there’s that…

Some decent data.

Provisional deaths and excess mortality in Canada dashboard

The dashboard presents data that are relevant for monitoring the impacts of COVID-19 on mortality in Canada. It includes the latest weekly death data, historical weekly death data back to 2014, updated adjusted (i.e. the estimated number of weekly deaths) and expected weekly death counts...

www150.statcan.gc.ca

Excess mortality, COVID-19 and health care systems in Canada

www.ncbi.nlm.nih.gov

Another thing we could do (and this will hurt) is move away from defined benefit pension plan to a defined contribution plan for federal employees.

Im ok with this, with the exception of medical pensions. Those wounded in service deserve some life long looking after by the Crown.

 

[TacticalTea]

No; previous generations die earlier. We’re going to live longer- potentially much longer in actuarial terms.

Not true. See Good2golf's stats.

I mean, just qualitatively, do you really come to that conclusion when you look at people's more and more sedentary lifestyles, worsening economic conditions, increasingly prevalent mental health problems, etc?

The population is getting older on average, but people aren't. We're just not having kids so not only are we not sustaining the pyramid scheme that are public retirement programs, we're actually steaming towards default.

But as dapaterson alluded to, it's not politically sexy to talk about these things because, as the population gets older, that segment which is most worried about their retirement is also becoming more powerful.

 

[brihard]

Not true. See Good2golf's stats.

I mean, just qualitatively, do you really come to that conclusion when you look at people's more and more sedentary lifestyles, worsening economic conditions, increasingly prevalent mental health problems, etc?

The population is getting older on average, but people aren't. We're just not having kids so not only are we not sustaining the pyramid scheme that are public retirement programs, we're actually steaming towards default.

But as dapaterson alluded to, it's not politically sexy to talk about these things because, as the population gets older, that segment which is most worried about their retirement is also becoming more powerful.

That’s life expectancy at birth, so there’s a 60+ year lag on those lives hitting government pension ages. Those hitting age 65 now were born when men’s life expectancy was 68 and women’s was 72. We’ve added about 11 years to that. There is a plateauing over the last few years; there’s also a ton of high end medical science that could really crack some serious diseases in the next decade or two, so we may see that increase again. In any case, if actuaries are concerned enough about strains on public pension plans to be pushing increased employee contributions to protect the funds, it’s reasonable to believe those same concerns apply to CPP and - especially with the diminishment of private sector pension plans - OAS.

 

[mariomike]

Regarding pensions.

Not sure what the pension formulas are for federal / provincial members.

This is the formula for municipal police officers, firefighters and paramedics in Ontario.

https://assets.ctfassets.net/na4vk285lvnk/2p3hCg8P9oR2gpWFSOPEl2/1ccbad7255f4998764a6f94d27059f1c/NRA_60_Q_A.pdf

It is a Defined Benefit plan.

The survivor pension equals:

• 66 2/3% of your lifetime pension
• plus a further 10% for each eligible dependent child, up to a total of 100% of the pension you earned.

The survivor pension is guaranteed for your eligible spouse’s life (it does not stop if your spouse remarries) and is eligible for OMERS inflation protection increases.

 

[Good2Golf]

In any case, if actuaries are concerned enough about strains on public pension plans to be pushing increased employee contributions to protect the funds, it’s reasonable to believe those same concerns apply to CPP and - especially with the diminishment of private sector pension plans - OAS.

I’m totally okay with that approach if they have the analysis to back it up, which I actually to believe they have. My point earlier was that it likely wasn’t due to a a direct linear mathematical link to life expectancy, since we statistically are topping out around the 80-ish mark.

 

[brihard]

I’m totally okay with that approach if they have the analysis to back it up, which I actually to believe they have. My point earlier was that it likely wasn’t due to a a direct linear mathematical link to life expectancy, since we statistically are topping out around the 80-ish mark.

Right, but again, there’s a generation plus lag in how the population waves impact. Which does at least leave tons of time to account and correct.

 

[Brad Sallows]

Not true. See Good2golf's stats.

Without a clear statement as to which cohort(s) a life expectancy prediction is made, no true/untrue determination is possible.

 

[TacticalTea]

Without a clear statement as to which cohort(s) a life expectancy prediction is made, no true/untrue determination is possible.

Life expectancy is trending down, fertility is trending down, health indicators are trending down, and average age is trending up.

There's no getting around all that, no matter what math tricks one tries to pull.

Edit: I realize my stance isn't clear.

Here's the thing, life expectancy is not going up, so one might think, great! pensions are safe. But no. Because labour force to retirees is going down as the population is general gets older.

In other words, we're screwed.

 

[QV]

Life expectancy is trending down, fertility is trending down, health indicators are trending down, and average age is trending up.

There's no getting around all that, no matter what math tricks one tries to pull.

Edit: I realize my stance isn't clear.

Here's the thing, life expectancy is not going up, so one might think, great! pensions are safe. But no. Because labour force to retirees is going down as the population is general gets older.

In other words, we're screwed.

Then CPP and OAS at an earlier age for all!

But no, that only ratchets one way regardless of life expectancy trends.

 

[TacticalTea]

Then CPP and OAS at an earlier age for all!

But no, that only ratchets one way regardless of life expectancy trends.

No man!

I'm saying everything is screwed (typical of me, I know), but that the important metric is not life expectancy, it's average age!

If life expectancy is a problem, it's probably in this indirect way: it used to be doctors would say "we'll do everything we can, ma'am", and that kinda was cheap talk, because there wasn't all that much we could do. But now we can purge millions and millions of dollars in treatment into every single patient, so the costs of healthcare are going way up.

 

[Brad Sallows]

Life expectancy is trending down, fertility is trending down, health indicators are trending down, and average age is trending up.

There's no getting around all that, no matter what math tricks one tries to pull.

Edit: I realize my stance isn't clear.

Here's the thing, life expectancy is not going up, so one might think, great! pensions are safe. But no. Because labour force to retirees is going down as the population is general gets older.

In other words, we're screwed.

I suppose that pensions are mostly safe, because most pension funds are asset-based and solvent.

As for the rest; yes, getting away from pyramid/ponzi funding structures is a good idea.

 

[mariomike]

If it's good policy to move age benchmarks for OAS, GIS, CPP, etc, it's likely also good policy to extend required working lifetime to achieve full pension (eg. minimum 40 years full-time equivalent). Another sound policy would be to stop calculating pension income based on things like "best 3 years" and move to a formula blending all years of employment.

The OMERS Supplemental Pension Plan for police officers, firefighters and paramedics offers optional benefits.

https://e-access.omers.com/content/administering-the-plan/supplemental-plan

Supplemental Plan benefits are not automatically provided.

2.33% accrual rate

80 Factor ( age + years of service = 80 )

“Best three” earnings

Police civilians are not eligible for the 2.33% formula (due to federal law) and are not eligible for the 80 Factor (due to their normal retirement age of 65).

 

[IKnowNothing]

Pension solvency/ demographics are interesting- but an entirely different issue than OAS overspending. It's decadent and wasteful, and should be the first thing on the chopping block.

Trevor Tombe estimates $6B CAD to households over 150k.
Here's another article about it
Globe editorial: Subsidies to rich seniors make no sense

 

[Halifax Tar]

Pension solvency/ demographics are interesting- but an entirely different issue than OAS overspending. It's decadent and wasteful, and should be the first thing on the chopping block.

Trevor Tombe estimates $6B CAD to households over 150k.
Here's another article about it
Globe editorial: Subsidies to rich seniors make no sense

I have two minds on this. If the well to do elderly have been contributing to this for their working life they should be entitled to receive it. My other half brain says put an income cap on the benefit so only those in need get it.

 

[FSTO]

I'm old enough to remember when Bismark introduced the idea of an old age pension. The age to get the pension was 70, (reduced to 65 in 1916).

Fun fact:
At that time, the life expectancy in Germany (Bavaria) was 37.7 years for newborn males and 41.4 years for newborn females (Bayerisches Landesamt für Statistik, 2010).

 

[Halifax Tar]

I'm old enough to remember when Bismark introduced the idea of an old age pension. The age to get the pension was 70, (reduced to 65 in 1916).

Fun fact:
At that time, the life expectancy in Germany (Bavaria) was 37.7 years for newborn males and 41.4 years for newborn females (Bayerisches Landesamt für Statistik, 2010).

There is something crooked about that.

 

[IKnowNothing]

I have two minds on this. If the well to do elderly have been contributing to this for their working life they should be entitled to receive it. My other half brain says put an income cap on the benefit so only those in need get it.

No one contributes to OAS- it's a welfare benefit paid from general revenues.

 

[TacticalTea]

No one contributes to OAS- it's a welfare benefit paid from general revenues.

TIL: general revenues are not contributed to. Where do they come from, one might wonder. A pot'o'plenty at the foot of a rainbow, surely.

 

[IKnowNothing]

TIL: general revenues are not contributed to. Where do they come from, one might wonder. A pot'o'plenty at the foot of a rainbow, surely.

"Pensions" of the OAS type are quite literally called either "Social" Pensions or "Non-Contributory" Pensions. There is no fund, no plan. Recipients don't directly contribute amounts which create a liability that is due to be paid to them or their survivor.

So no. Well to do seniors have not contributed to OAS all their lives, so they are not entitled to anything. They've paid taxes. We as a democratic society determine what that tax money needs to be used for. Whether we want to spend within our means. Whether we want fiscal responsibility.

Is "they paid taxes all their lives and would be cranky at being left out so current tax payers should cover their annual vacation" a sound way of setting fiscal policy?

 

[Brad Sallows]

No one contributes to OAS- it's a welfare benefit paid from general revenues.

Ditto GIS for those that receive it.