Letter: Private-sector workers over fund, under receive within current pension setup

By Letter to the Editor on August 19, 2025.

Dear editor,

A person’s financial position at retirement affects the meaning for “pension.” A retiring Alberta teacher at age 55 with 30 years experience will have a guaranteed defined benefit pension, which will pay around $50,000 annually if the highest salary approximates $85,000. CPP and OAS could add another $20,400 for a retirement income of $70,400 annually, $5,800 per month from age sixty-five.

CPP/OAS are accepting pension supplements when they boost the retirement income to exceed the current average Canadian salary of $58,000.

The retiree will have contributed to the pension plan and the CPP, and the taxpayers’ purse has also contributed to both pensions and the OAS.

Unquestionably it is a system to be supported by these retirees, about one third of the workforce, mainly in the public sector.

Two-thirds of the workers, mainly in the private sector, are without a private pension plan. Their employer will have contributed matching dollars to the CPP, and the taxpayers fund their OAS. These two sources are less than the poverty line of $ 30,000, it is not a living pension. The additional GIS would increase the pension to $28, 248.

These workers have had to invest in a RRSP to grow their own retirement fund. A monthly payment of $200 for 33 years and compounding at 10 per cent may grow to $600,000, which would pay a pension of $30,000 if dividend income rates are at 5 per cent, and this income is not guaranteed.

Here lies the problem. This disparity has existed for many years, but our governments have ignored this issue. Only about one third of these workers will have an RRSP, and then about 12 per cent maximize their contributions annually.

A large group is without a retirement fund, yet all these workers’ taxes are helping to build retirement funds for public-sector workers.

Several years ago the C.D. Howe Institute reported that private-sector workers have retirement incomes which are “a fraction of what public-sector workers receive.” Our governments, supposedly for all the people, readily allocate revenues to public-sector pensions, then expect the other workers to fend for themselves.

A living retirement fund requires a substantial investment over many years. The system for all Albertans/Canadians should have one formula even though actual pensions will vary. The challenging issue is how to finance this plan.

Larry Samcoe

Medicine Hat

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