Ensuring Dignity in Retirement

In this opening installment of Parkland’s two-part blog series on Alberta pensions, the authors examine the history of pension plans in Canada and Alberta, setting the stage for understanding the UCP's pension policies and their current proposal of an Alberta Pension Plan. For a recent history and analysis of the UCP's stance on public pensions, please read the blog “Navigating the UCP’s Pension Agenda,” by Bob Ascah.

The Alberta government promotion of an Alberta Pension Plan (APP) stirred memories of what older Albertans faced before the federal government established the Canada Pension Plan (CPP).

As retired social workers now and beneficiaries ourselves of the CPP and the Old Age Security (OAS), our careers began around the time the CPP was planned and subsequently implemented.

In this blog, we offer a broad sketch of the evolution of social security programs in Canada, which led to a progressive employer-employee-funded pension plan in 1966.

Origins

The 19^th century Industrial Revolution brought to the fore the notion of employment pensions or social and disability pensions in many countries. Denmark, for example, introduced “an old age allowance to those worthily in need who had reached the age of 69,” while in Germany Otto von Bismarck introduced social insurance legislation to create a mandatory (with employee, employer, and government contributions) retirement and disability pension program for workers, who would become eligible for a pension at age 70.

In Canada, the development of the CPP began in the late 19^th century as a fragmented response to the need for financial security on retirement for judges, senior public servants, members of the militia, and other civil servants. What stands out most in early discussions is the government’s sense of obligation to those who completed a period of service to Canadians. In 1915, the House of Commons received a preliminary report on the information collected under the recommendations of the Committee on Old Age Pension System for Canada, a committee that had been established in 1907 for “improving the condition of the aged and deserving poor.”

The discussions included in the report are fascinating examples of the mindset of these initial steps toward the CPP. In a discussion about the “deserving poor,” for example, a Mr. Bradbury from Ontario says, “The popular idea of giving charity has been to create institutions and to put people in them. Deserving people should not be put into charitable institutions simply because they are in want. They have done nothing to deserve that, and I think we ought to guard against putting that stigma on people in Canada.”

In a similar vein, J.J. Kelso, Ontario’s first Superintendent of Neglected and Dependent Children, made the following plea: “Now I find that there is a feeling all over the civilized world that there ought to be a more equitable distribution of the world’s wealth and that there ought to be more general comfort in the interests of the social welfare of people; that every man and woman has a right to share in the good things in life, that instead of waiting for happiness hereafter we should strive to make the people happy here.”

First as part of the Northwest Territories and then as a province in 1905, Alberta inherited the English Poor Laws. These laws had an impact during much of the 20^th century and were delegated largely to municipal jurisdictions, stipulating residency requirements and distinguishing the deserving from the undeserving poor. Assistance had many names: relief, hand-out, the dole, and welfare, among others. Assistance for unemployed employable residents and single men had to be lower than the lowest wage of working people. 

Wars and their influence

World War I and the 1918 influenza pandemic forced governments to respond to social and medical needs like never before. The hardship of women widowed as a result of the war received attention. Also on the spotlight, for the first time, was assistance based on age, when Federal legislation was passed in 1927 enabling cost sharing with the provinces. That was followed in 1937 by legislation for blind persons, and in 1955 for totally disabled persons.

Each province established and administered its own welfare programs. Assessment was passed through a means test which limited eligibility to individuals and families whose incomes and assets fell below a predetermined threshold.

Considerable reform was introduced as a result of post-WWII reconstruction planning. The movement toward reform was in part motivated by people (many of them war veterans) who had experienced WWI, the Great Depression or WWII.

The impact of research

Around that time, two academics who believed in the value of “The greatest happiness of the greatest number,” Dr. Harry Cassidy and Dr. Leonard Marsh, conducted extensive research that contributed substantially to the general stock of ideas about social welfare reform. Dr. Marsh advised the federal government on post-war (WWII) reconstruction. As Allan Irving remarked in his article about Cassidy and Marsh, “One could argue that [Cassidy and Marsh] had, if not a direct, then certainly an indirect, effect on the development of the Canadian welfare state.”

Post-war reconstruction planning had the benefit of left-of-centre and right-of-centre perspectives and input.  In 1943, the leader of the Progressive Conservative Party of Canada, Mr. John Bracken, contracted Charlotte Whitton, Ph.D. (Hon.), known for child advocacy during the 1920s and 1930s, to “produce a comprehensive statement on social security.” Whitton’s The Dawn of Ampler Life: Some Aids to Social Security became known as the “Whitton Plan.” She considered Marsh and Cassidy as “favourites of the Liberals and camp followers of the socialists.”
 

Universal social security

The federal and provincial governments supported the post-WWII infrastructure reconstruction that led to universal social security initiatives such as unemployment insurance in 1940, the family allowance in 1944, and, in 1951, the Canadian Old Age Security Act, which endorsed the formation of a national, universal flat-rate old-age pension plan.

Citizens 70 years of age and over were now entitled to a federally funded pension, irrespective of earnings and assets. The pension, originally $40 per month, had inched its way up to reach $75 by October 1965. The Act was amended in 1965 to lower the age of eligibility over a 5-year period to 65 by 1970. Those were critical factors that improved the quality of life for older Albertans facing retirement. First Nation members initially did not qualify for OAS, but that position was eventually successfully challenged in court and changed.

There was poverty in Alberta, and many older Albertans led a marginal existence, thanks in part to marginalizing provincially set welfare benefits. For most of them, the CPP was introduced too late, but they welcomed the entitlement to OAS. Once a person was entitled by age, income and assets were private matters that didn’t affect eligibility for the OAS.
 

Poverty and welfare

In earlier times, few people had a workplace pension, and for those who had, it tended to be meagre. Many people had limited or no household savings, and a contributory pension plan (the CPP) was still years away.

As Canadian-born political scientist Jacobus tenBroek said in the 1960s, welfare programs were “designed to safeguard health, safety, morals, and wellbeing of the fortunate rather than directly to improve the lot of the unfortunate.”

Categorical pensions (Old Age Assistance, Disabled Persons’ Pension, Widow’s Pension, and Mothers’ Allowance and Supplementary Allowance) were complex and labour-intensive to administer. Those pensions were needs-based and hardly relieved poverty. Recipients could not get by without additional help from family, friends, and charity.

Old Age Assistance as a welfare program was the second largest expenditure in Alberta’s Department of Public Welfare’s 1965/1966 budget, before the CPP was implemented.

In some instances, older folks who were eligible for Old Age Assistance refused it outright and chose to stoically wait and endure hardship until they were entitled to OAS. Much of their reaction was likely due to the fact to qualify for Old Age Assistance they had their personal circumstances, incomes, and lives scrutinized and then re-assessed annually to ensure ongoing eligibility.

There was considerable unevenness across the province in the administration of public welfare. Alberta did not have formal training in social work until the 1960s, and statutory duties were in the smaller communities often delegated to well-meaning volunteers or tagged on to other existing functions of civic employees.

The Canadian Pension Plan is born

The 1960s was a benchmark period of productive inter-provincial and federal-provincial consultation on social issues, resulting in progress. An agreement was reached to amend the British North America Act in support of a national, contributory old age pension, complemented with survivor and disability benefits: the Canada Pension Plan.

The CPP was not funded by taxation, and its contributors were not governments. The investors were employers and employees, with contributions that covered basic pension retirement benefits, death benefits, disability pension, and survivors’ pension.

It took time before CPP funds could award a meaningful pension. Along with OAS reform and the introduction of the CPP, the Federal government introduced the Canada Assistance Plan (CAP). The CAP enabled federal, provincial, and municipal cost-sharing of a range of social programs across Canada. The development of the CAP had substantial input from Alberta. In 1999, the CAP was replaced with the Social Union Framework Agreement. The social charter emphasized common standards and the portability of social programs across Canada. 

Collaborative planning with the federal initiatives resulted in major federal and provincial policy reform that benefited Albertans, as evident in the province’s needs-based Social Allowance, Preventive Social Services (PSS), and upgraded child welfare services, reforms introduced in the 1960s.

Current issues

Currently, there is nothing, at least not in the public eye, that shows this kind of collaboratively improved policy planning is underway between Alberta and the federal government.

We are pleased, but not surprised, to see the Canadian Labour Congress and the Alberta Federation of Labour champion and defend the federally-initiated OAS and the CPP. Labour organizations lobby to ensure that the adequacy of social programs is periodically upgraded and enriched to benefit workers, young and old, for future generations to come.

In a 2010 publication, the Canadian Labour Congress concluded that “By 2004, poverty rates among seniors were half those of the working-age population. Federal public pensions like OAS and GIS were crucial to this success.” More recently, in a 2018 paper published by Statistics Canada, Adrienne Harding concluded that “OAS/GIS and CPP/QPP were the largest benefit programs and had the largest effect in reducing low income among the whole population.”

The Canadian Labour Congress and Harding confirm a trend that we began to witness during our careers. From a social policy perspective, we too are of the opinion that national-driven social programs such as OAS and the CPP can continue to lower poverty. It took Canada a long time to introduce a national pension plan, but the CPP has successfully and efficiently operated since 1966 as a contributory pension plan. The two programs are administered on a much lesser labour-intensive basis than welfare programs.

Given a volatile geopolitical climate globally, constant workforce migration, uncertainty associated with climate change, and increasing precariousness for many workers, fragmentation of the CPP would negatively impact workers in retirement now and in the future.

Demographic changes in Québec resulted in changes in policy implementation, so it is fair to speculate that fragmentation of the CPP can lead to changes in contributions and benefits across Canada. Balkanization of the CPP and the potential of some provinces or territories not being able to operate a pension plan has already created uncertainty and anxiety across Canada.  

Combined, the OAS and the CPP represent a basic income floor that did not exist before 1966. The fundamental game changer was entitlement to benefits for citizens as taxpayers to the OAS, and entitlement to the CPP based on contributions made during one’s working years. Entitlement gives a strong sense of independence, if not ownership, which remains a reality to this date.

Canadians from coast to coast, young and old, poor and rich, we all support each other. The OAS and the CPP are social security programs with well-established federal-level histories. They are as important as ever.

There is nothing in the history of the Alberta government that shows that public welfare benefits for all citizens have ever been a high priority beyond the legacy of the English Poor Laws. Before claiming that replacing the CPP with an Alberta pension program would be a net benefit for all Albertans, the government would need to demonstrate that adequate social security benefits would be in place.

 

Note: the top banner image was AI-generated.