Summary report: Real Life Issues for Canadian Families: How do we Care?
Download the full conference summary report here. You can also find the original discussion paper here.
A growing number of Canadians now belong to what is commonly known as the “sandwich” generation. Caught between caring for their parents and their children, these Canadians face difficult choices not common to past generations.
We are also facing a looming retirement challenge. Canadians are not saving enough for their golden years, and many company sponsored pension plans that were supposed to provide some measure of retirement income security have proven in the last recession to carry significant risk. Our health care system, justifiably a source of national pride, is also facing growing challenges. Advances in medicine and technology, combined with an aging population, will translate into significantly higher overall health costs in the years to come.
Redefining the Care Agenda
David Dodge, former governor of the Bank of Canada, set the table for discussions of the care agenda by making four key points. Echoing previous speakers, he first noted that Canada needs to increase its productivity if we are to continue caring for all. When the Pearson governments put in place significant social programs such as Old Age Security, the Canada Pension Plan, and federal support for post-secondary education and medicare, Canada’s productivity was growing at 3 percent a year. Over the past decade, that has slowed to 1.25 percent a year, and is set to slow even further and then decline, in the years ahe
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Download the full conference summary report here. You can also find the original discussion paper here.
A growing number of Canadians now belong to what is commonly known as the “sandwich” generation. Caught between caring for their parents and their children, these Canadians face difficult choices not common to past generations.
We are also facing a looming retirement challenge. Canadians are not saving enough for their golden years, and many company sponsored pension plans that were supposed to provide some measure of retirement income security have proven in the last recession to carry significant risk. Our health care system, justifiably a source of national pride, is also facing growing challenges. Advances in medicine and technology, combined with an aging population, will translate into significantly higher overall health costs in the years to come.
Redefining the Care Agenda
David Dodge, former governor of the Bank of Canada, set the table for discussions of the care agenda by making four key points. Echoing previous speakers, he first noted that Canada needs to increase its productivity if we are to continue caring for all. When the Pearson governments put in place significant social programs such as Old Age Security, the Canada Pension Plan, and federal support for post-secondary education and medicare, Canada’s productivity was growing at 3 percent a year. Over the past decade, that has slowed to 1.25 percent a year, and is set to slow even further and then decline, in the years ahead.
In order to address the productivity challenge, Mr. Dodge argued for new approaches to taxation, regulation, labour markets, and trade policies. Most importantly, he emphasized the need to balance federal and provincial budgets over the medium-term by pursuing a graduated approach that does not undermine the recovery, with carefully chosen tax measures and reductions in spending.
Second, Mr. Dodge warned that as Canadians live ever longer lives, we will need to save more in our working years, and may need to retire later in life. He estimated that a worker earning $42,000 a year needs to save 11 percent of their income each and every year they are working in order to retire at the age of 65 with a retirement income of 70 percent his annual earnings. It gets even harder for those earning more. For someone earning $95,000 a year, the savings rate rises to 17 percent. Few Canadians save this much.
On health care, his third point, Mr. Dodge estimated that costs are increasing 1.5 percent each year due to medical advancements alone. Overall costs will increase at 7 percent per year this decade, and will rise by 8 percent by the end of this decade, twice as fast as government revenues are growing. He noted that there is no magic solution to this challenge, but it was time for Canadians to have an “adult” debate about the issue.
Finally, Mr. Dodge called for a new boldness in dealing with long-term care for the fragile elderly. Canadians who have worked all their lives to build this country deserve to be cared for with dignity in their final years. A more humane approach to long-term care must involve all levels of government and individual Canadians.
Improving the Pension System
Christiane Bergevin, Executive Vice-President of Desjardins Group and moderator of the retirement income panel, led off the pension discussion by sharing a certainty from her childhood: That after a lifetime of hard work, a secure retirement would be waiting. The reality today is much less certain. The recent economic crisis has exposed weaknesses in private sector pension arrangements. Many Canadians have seen their Registered Retirement Savings Plans (RRSP) suffer significant losses. Pensioners who worked for failed companies such as Nortel are seeing their defined-benefit plans put in jeopardy. Many more Canadians are simply not saving enough.
Bill Robson, President and CEO of the C.D. Howe Institute, argued that the first two pillars of the system – the public elements that include Old Age Security, the Guaranteed Income Supplement, and the Canada Pension Plan (CPP) – are on sound footing, praising the work of Jean Chrétien and Paul Martin in the late 1990s in putting the CPP on a sustainable footing. He pointed out that the real weakness in Canada’s retirement income system lies in the so-called third pillar of pension arrangements consisting of employer-sponsored plans and individual RRSP accounts. In his view, new and more flexible instruments are needed to encourage personal savings.
To address this challenge, Keith Ambachtsheer, Director of the Rotman International Centre for Pension Management, called for the creation of a supplementary version of the Canada Pension Plan that would offer Canadians a new, low-risk, and low-cost option to save for retirement. Such a supplementary CPP would offer Canadians a hassle free way to put aside retirement savings, and could be made available to all Canadians, including the self-employed. He argued that all Canadians should be automatically enrolled in this new retirement savings vehicle, with the option to opt out of the program if they wished.
Going further, both Ken Georgetti, President of the Canadian Labour Congress, and Bernard Dussault, former Chief Actuary of the Canada Pension Plan, came out in favour of mandatory increases in the CPP to ensure Canadians save enough for retirement. They believed that Canadians will only save more if they are forced to save more. Mr. Georgetti noted that only 1 in 4 taxpayers made any RRSP contributions in 2008.
Claude LeBlanc, a Senior Vice-President at Standard Life, was skeptical about expanding the CPP rather than improving private sector options. He agreed however that the balance for Canadians between spending and saving had swung towards the former, and that it was perhaps time to put more of an emphasis on the latter.
Concerns were also expressed about the collapse of private-sector defined-benefit plans, but there was skepticism over the feasibility of government-backed guarantees. Mr. Ambachtsheer argued that it was far better to address the issue before retirement plans run into trouble by regulating them to meet certain solvency tests, just as we do with insurance companies.
Most panelists agreed that greater flexibility and diversity was needed in the pension system, particularly to account for people’s different abilities to save and spend at different periods of their lives. Mr. Leblanc noted that for many Canadians it was more important to first buy a home and start a family. Some Canadians may even prefer to work past the age of 65. A member of the audience went further, advocating for a universal lifetime savings limit rather than the current system of annual limits based on yearly income. Another suggestion involved removing minimum required withdrawal amounts from Registered Retirement Income Funds for Canadians when they reach the age of 72.
Prompted by a question from the audience on the complexity of pension reform, panelists acknowledged that any reforms to the retirement savings system would require a collaborative effort from both levels of government.
More Emphasis on Health Promotion
With the continuing rise in health care costs, members of the health panel were in agreement that a large part of any solution lies in health promotion. Marie-France Raynault, Dean of l’Université de Montréal’s Department of Social and Preventative Medicine, noted that the key challenge is addressing obesity, which leads to chronic diseases such as diabetes and cardiovascular problems. While Canada has not reached the same levels of obesity as the United States, she warned that we are only 10 years behind. The World Health Organization recommends governments spend 5 percent of health spending on health promotion. Provinces currently spend no more than 3 percent in the best of years.
Prompted by online questions from Fredericton and Rivière-des-Milles-Îles on what can be done to strengthen preventative health, Dr. Raynault urged people to engage in daily physical exercise, to eat healthier foods, and to ride a bike to work and school. She stressed the importance of limiting urban sprawl and establishing more municipal parks.
Towards Evidence-Based Health Care
Alan Bernstein, Executive Director of the Global HIV Vaccine Enterprise, highlighted the need for more evidence-based research to improve our health-care system. He acknowledged that there is little we know about why some people age well while others do not, and learning more about this will help manage health care costs and facilitate health promotion.
Canada has an opportunity with its fourteen different jurisdictions to experiment with different ideas, and share best practices across the country. Data and evidence will also help inform the advisability of expanding health care coverage to include things such as catastrophic drugs and home care. A question from cyberspace on private health care elicited a frank response from Lucienne Robillard, a former Quebec Minister of Health and Social Services who moderated the health panel. She acknowledged that publicly-funded health care is a sacred cow in Canada, but its sustainability is worth examining given that some private delivery already exists in Canada. Dr. Bernstein noted that Americans have long had a private system but they have worse services and spend more for it. Private sector involvement is no panacea, and any changes to the health care system should be based on data and a careful examination of the evidence base. Above all, changes should not be driven by ideology.
Caring for the Elderly
William Reichman, President and CEO of Baycrest, noted that many of the elderly in North America spend the last three years of their lives in nursing homes. He challenged the audience with a societal goal of reducing this to the last three weeks of life. Echoing this point, Dr. Bernstein noted that we only put people in nursing homes because we do not have any other way to provide for end-of-life care. It is time that we look for better and more compassionate ways to care for the elderly. Further support should also be provided to caregivers, many of whom are women and who go unpaid for their work.
On a related matter, a cyberspace participant from Brossard Skyped-in a question asking how we can better deal with the challenges of Alzheimer’s disease. Currently, 500,000 Canadians are afflicted with this devastating ailment, and within a generation this could rise to 1.1 million. It costs $15 billion a year to care for Alzheimer’s patients, and a recent study estimated that that figure could rise tenfold by 2038. Dr. Reichman noted that more research needs to be done to better understand the risk factors associated with the disease. New studies suggest that Alzheimer’s may actually begin much earlier in life than previously thought, and one possible approach to treatment may be to intervene earlier. More generally, Dr. Bernstein called for action to de-stigmatize mental health illnesses.
Questions for Further Discussion
- What should be done to increase the amount Canadians save for retirement?
- How can current retirement savings rules be made more flexible?
- How can future solvency problems for employer-sponsored pension plans be prevented?
- What can the federal government do to promote exercise and healthy eating?
- What areas of health care would benefit most from further evidence based research?
- What should be done to address mental health diseases and other challenges related to elderly care?
