Time to slay the myth of job-killing pension plans: Cohn
Powerful interests are counting on public confusion about far-off retirements to sow present-day panic.
With big money at stake in Ontario’s new pension plan, the drumbeat of misinformation is gathering momentum.
Powerful business interests are counting on public confusion and apathy about far-off retirements to sow present-day panic. Don’t let opposing voices distort the Ontario Retirement Pension Plan (ORPP) without first learning the facts for yourself.
You will hear critics denounce the new ORPP as a “job-killing payroll tax,” borrowing the barbs perfected by the defeated Stephen Harper government. Their claims about the pension, scheduled to be phased in starting next year, are camouflaged in ideology.
Pension premiums aren’t a tax. And they’re not a job killer.
You can look up the definition of taxes in the Oxford Dictionary: “A compulsory contribution to state revenue, levied by government on workers’ income and business profits.”
In fact, taxes are collected by governments to pay for hospitals, schools and police. That’s not how the ORPP is designed.
Despite the myths, pensions aren’t controlled by politicians. Under the laws of this land, all pension premiums — including the ORPP — go directly into a separate (“segregated”) fund managed by an independent entity at “arm’s length” from government.
Pension premiums are invested in diversified funds, relying on future accruals to one day return that money — plus accumulated investment income — to pensioners upon retirement. If workers are getting their money back (and more) without government ever getting close, how is that a tax?
Next question: Are pension premiums really the “job killers” that Harper kept warning of — a claim parroted by his cousins in Ontario’s PC Party, echoed by business lobby groups and repeated in the financial press?
Beyond the rhetoric, bear in mind that economics is an inexact science, vulnerable to many variables (think oil price volatility). Doomsday forecasts aren’t worth the computers they are modelled on.
Remember the cries of alarm from business when Ontario raised the minimum wage in 2014, from a stagnant $10.25 an hour to $11? How many jobs were killed to create the highest minimum wage among Canadian provinces?
In fact, Ontario’s unemployment rate decreased from about 7.5 per cent in late 2013 to 6.7 per cent last month. So much for job-killing scaremongering.
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