The Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator for permission to post the following Editorial by Lee Prokaska,

published in the March 28, 2006 edition

Pension perils

By Lee Prokaska
The Hamilton Spectator
(Mar 28, 2006)

The details can be difficult to grasp, but most of us count on our company pensions to provide at least a roof over our heads, food in our stomachs and coverage for our medications after we retire.

So it's scary to hear that federal Finance Minister Jim Flaherty has been warned that struggling private pension plans will likely be in worse shape this year than they were last, with increasing numbers becoming less than fully funded.

The Office of the Superintendent of Financial Institutions (OSFI) indicates some pension plans may be given the go-ahead to reduce previously promised benefits to retirees.

For those who spent their adult lives contributing to a company pension plan, this would be a figurative slap in the face and a literal whack in the wallet. For those still working, and counting on their company pension for the future, the prospect of uncertainty is a significant discomfort.

But this is not simply an issue of a bunch of elderly people worried about their retirement incomes. The Stelco experience should stand as a red flag for the federal government; the magnitude of a company's under-funding of its pension plan has a direct impact on its value and that, as we have seen in Hamilton, has a substantial economic ripple effect.

Increasingly, we are seeing younger workers opting out of private pension plans altogether, preferring to invest their money on their own if they are planning for their retirements. Many workers in pension plans hedge their bets, working to supplement company pension payments through personal investments. Those trends put private pension plans in competition with the mutual funds market.

It is in everyone's best interests to maintain public confidence in company pension plans. That may mean a greater level of transparency or a change in pension laws. Regardless, pension plan issues need a higher public profile, more public debate and a greater priority on the federal government's agenda.

If pension plans fail, it is certainly a tragedy for families. But the impact on the Canadian economy of a series of such family tragedies is terrifying to contemplate.