(Bloomberg) — An election campaign in Canada could offer Democrats a primer on how to sell a new retirement plan in the U.S. — and whether it’s even worth trying.
Voters in Ontario, Canada’s largest province, will decide next month whether to give the current Liberal government another term in office. One of the central issues in the campaign is a Liberal Party proposal for a new mandatory province-wide pension plan for anyone not already covered by a workplace plan, to be paid for jointly by employers and workers. (There would be some exemptions, including the self-employed.)
The Liberal proposal reflects the same economic pressures at play in the U.S. — the share of people covered by employer plans is falling, private saving isn’t making up the difference, and the rising share of elderly residents (including those in poverty) makes the problem increasingly acute. As Bloomberg News’s Cecile Gutscher reported this month, more than 35 percent of Ontario households won’t have enough savings to maintain their standard of living in retirement, according to one estimate.
In the U.S., those trends have led to a range of proposals, such as President Barack Obama’s MyRA accounts for low-income workers and Democratic Senator Tom Harkin’s idea for auto-enrolling anybody not already in a retirement plan into one overseen by the government. None would restore the long-standing social contract between worker and employer, in which providing for an employee’s retirementis viewed as a shared responsibility.
The Ontario proposal is worth watching because it confronts that issue, giving employers a mandate to contribute to their workers’ pensions above and beyond what’s already required through the Canadian equivalent of Social Security. The Ontario plan would require workers to contribute 1.9 percent of annual income below C$90,000 ($82,631) and force employers to put up the same.