Cut out or print this column, put in an envelope, and come back to it in 15 years.
Because then the chickens will really be coming home to roost. And for most of us, there will be no stopping it.
When I started in the media in 1984, I was paid peanuts. Two-thirds of my pay went just to pay rent and utilities, and a monthly trip to McDonald’s was a treat.
But what I did have, and didn’t appreciate, was excellent benefits. A defined benefit pension plan — along with health, dental, pharmacare and vision care that was 100 per cent paid by my employer, with no deductible. It didn’t make me any richer, but it sure dealt with any financial health surprises that might pop up — and I was young enough that I didn’t really appreciate it.
Things changed, jobs changed. Benefits got whittled away. Basic company health plans became progressively more basic, paying less of the real costs involved. (Someone somewhere in the insurance business thinks $125 is all that glasses should ever cost.) Deductibles rose. Add-on plans, where you could pay more for better benefits, got more expensive. Severance terms were altered, usually settling around the absolute minimum amount required by provincial law.
Most significantly, defined benefit pensions became combined defined benefit/defined contribution plans, and then, just defined contributions.
I know I’ve talked about this before, but the reckoning is coming.
My generation is the one on the cusp, the ones with a foot in both doors, the one that watched private business walk away from guaranteed pensions.
I understand why it happened; I’ve worked for a publicly traded company or two where quarterly results were crucial, where annual results were the Holy Grail, and the company’s health five years down the road didn’t matter, because, with executive churn, that would probably be someone else’s problem.
That great transfer of fiscal responsibility from employer to employee is one of the greatest thefts employers have ever done to their staff. We’re the pension guinea pigs.
Getting out from under the burden of potentially having to pay pensions was a magic bullet: millions of dollars of contingent liabilities vanished off the books, and you could tell your employees that it was all good news — that you were giving them full control over their own future. Kind of like kicking you off the bus in Amherst, N.S., but telling you it was great, because you now had the opportunity to find your own way to Winnipeg.
That great transfer of fiscal responsibility from employer to employee is one of the greatest thefts employers have ever done to their staff. We’re the pension guinea pigs.
There are, of course, people who will still do well; pensions in the public sector chug along, giving retirees a much better shot at a basic standard of living.
There are also those with the knowledge and skill to parlay their self-directed retirement fund into bigger things.
There are also many people who are going to do much worse. Many, many, many people. It will probably get even worse. People talk about the modern gig economy, about shifting from temporary job to temporary job, never pointing out that those jobs often have no benefits at all.
But young people still have time to make sure they save, you might argue.
They might — remember, though, that at 22, I had great benefits and no real idea how good they were, or that I would ever need them.
Youth.
Governments might be concerned about all of this, except for the simple fact that they are also focused on short-term results — their re-election.
They, of course, also have defined benefit pensions, rather that defined contribution ones.
It’s like having millionaires telling you not to worry about paying your electrical bill.
Russell Wangersky’s column appears in 36 SaltWire newspapers and websites in Atlantic Canada. He can be reached at [email protected] — Twitter: @wangersky.
