As federal and provincial finance ministers gather for next week’s summit meeting, we understand that pension issues will once again be at the top of the agenda. 

Founded in 1963, the Retail Council of Canada is a close contemporary of the 1965 birth of the Canada Pension Plan. It was involved in the debates at its foundation and our member employers have been huge contributors to the plan over the past five decades.  Today, retail employs more Canadians than any other industry, with 1.9 million Canadians working in our sector.  We thus feel well entitled to offer our views to ministers as they deliberate on these important issues.

Let us begin by noting that the retail industry has both long-term and short-term perspectives on pension adequacy.  Over the long-term, the ability of Canadians to have income sufficient to buy the goods and services they need is of obvious concern to retailers.  We are also keenly aware that retirement incomes are important to the health of the overall economy, to government revenues and to the cost of income-tested social programs, including the OAS and GIS federally, and drug benefits at the provincial level, among others.  That long-term perspective means that retailers want to see pension issues debated fully, leading to well-designed solutions to the income challenges of an ageing population.

At the same time, however, the retail industry is making big investments today for growth and jobs.  As Canada’s largest employer, retail’s investment decisions are, we believe, of vital importance to Canada’s economic health.  Any pension proposal that would involve substantial increases in payroll costs is going to have an inevitable and negative impact when it comes to growth in jobs and productivity. Our short-term investment decisions are made and cannot accommodate increased payroll costs.  But even over the longer term, governments are going to have to reconcile their call for investment, productivity and job growth with extraction of part of the funds that would otherwise be available to make those investments.

Apart from employer contributions, there are also implications of increased employee contributions. Increased payroll deductions for pension savings will lower disposable incomes and move money away from domestic consumption.  Given the precarious state of the economy, we would ask ministers of finance, who are stewards of that economy, to be very careful about how much can be extracted from domestic consumption without choking off the economic recovery.

Both on employer and employee contributions, an increase in payroll contributions, which are deductible, would in turn diminish government revenues at both the federal and provincial levels.  We would note that government, and provincial governments in particular, have made vocal cases that they have inadequate financial resources to meet all of their policy commitments.

As employers, we are being asked by provincial governments to contribute to higher spending on environmental stewardship, on addressing huge infrastructure deficits and now to contribute to solving the issue of pension income adequacy.  While these may all be laudable objectives, we see little evidence that these competing demands have been reconciled. We remind ministers that while we may pay taxes, fees, contributions, premiums or some other euphemism, we have only one source of revenue – purchases at point-of-sale and that these competing policies are all targeting that single revenue source.

RCC encourages a full debate on the need to address pension adequacy but if the debate is one between “getting it fast” and “getting it right”, RCC and our retail members fall squarely into the camp of taking the time to get it right and being mindful throughout of competing priorities and demands.

Regards,

Diane Brisebois Signature

Diane J. Brisebois
President and CEO