"Canada Pension Plan Policy as violation of Judeo-Christian
Intergenerational Covenantal Mutuality"
by James Love
February 21, 1997
Several
years ago, young people began to hear that they should not count
on collecting the Canada Pension Plan (Canada Pension Plan) by the time they reached
retirement age. They were told that Baby Boomers would collapse
the pension system thereby leaving latter generations with nothing.
During this time I began an exploration of how Canada administers
its social safety net for seniors. While I discovered that the collapse
of the Canada Pension Plan was a myth, I also discovered that the Canada Pension Plan was fundamentally
flawed.
How our
societies reallocate resources between generations is important.
This area of social policy has received little attention in relation
to ethics. There has, however,r been a lot of ethical work in relation
to the issues of intergenerational resource allocation as it relates
to the distribution of medical care to the elderly. This paper will
rely partially on the work done on this related issue, but for a
good portion I will have to rely on my own ethical analysis. The
main points I will focus on will be covenantal mutuality, obligations
and issues of liberty.
Position
It is my
position that the Canada Pension Plan constitutes an unparalleled
transfer of wealth from younger historically economically disadvantaged
generations, to older, historically economically advantaged generations.
The Canada Pension Plan violates the intergenerational covenant
between generations by unduly burdening a poorer generation to benefit
an older wealthier one.
Although
this position may seem provocative to those on the Christian Left,
since it appears at odds with social gospel traditions, this paper
will show that the current Canada Pension Plan program actually
violates social gospel principles as well as other Christian values
upon which, I believe, this social program was founded.
Analysis of the Situation
Analysis
of the Canadian Pension Plan is difficult due to the complexity
and breadth of the issues involved. I will, therefore, highlight
the most important issues relating to the Canada Pension Plan plan
and the violations of the intergenerational covenant between generations.
Pension Costs to Rise
Statistics
Canada expects that between 2010 and 2040, due to the rising number
of seniors, overall pension costs will increase in real costs by
204%. This is even higher than the anticipated 118% rise in health
care costs. As a result, by 2040 pensions are projected to account
for 38% of social spending, up from 24% in 1980.
Given the
current demands on social spending and the increases in health care
spending due to an aging population, taxation costs will rise significantly
if the status quo is maintained. This increase in social spending
will have to be offset through lower social spending in other areas,
through increases in Canada's GNP, and/or through increased taxation
returns. Increased taxes or lowering of non-senior social spending
will undoubtedly put pressure on younger generations. This increase
in pressure is reflected in the dependence ratio between generations.
Age-Adjusted Dependency Ratio Issues
Canada's
current dependency ratio, the number of those under the age of 16
and over age 65 per 100 16-65 year olds, was about 67 in 1987; in
the 1960's it was about 70. It would appear that we currently have
about the same levels of social dependency as in the 1960's, but
if we account for the fact that social spending for seniors costs
about 2.7 times more than spending on children , the Age-Adjusted
dependency ratio in 1965 becomes 92.6, in 1987 it becomes 74.2 and
in 2030 it is expected to be about 129.6. If we are currently having
difficulties maintaining low levels of social dependency, it is
very unlikely that we will be able to fund the extreme increases
in dependency predicted by Statistics Canada.
The effects
of these high dependency ratios are important. The high social spending
necessary to support this dependency may actually impede Canada's
global competitiveness by lowering its GNP and thereby decreasing
its ability to produce the wealth necessary to maintain its existing
social safety net for Canadians of all ages.
Global Factors
Among the
G-7 countries, Canada is in one of the worse situations when it
comes to future social spending. Statistics Canada predicts that,
"Overall social spending in Canada is expected to increase 87% by
2040. By comparison, social spending in the United States and Japan
is projected to increase by 65% and 40%, respectively, while in
many European countries it is expected to increase only slightly
and even decrease."
It is clear
that Canada's internal resources are inadequate to meet social spending
expectations, and external pressures will exacerbate the situation.
Canada will have great difficulties in fulfilling the Canada Pension
Plan promises made to its seniors.
Promises Made
The most
important issue for those who support maintaining the current Canada
Pension Plan system is the issue of governmental promises. Canada
Pension Plan recipients & expectant Canada Pension Plan recipients
clearly believe that the Canadian government has an obligation to
pay them Canada Pension Plan. The Canadian government made promises
of a universal Canada Pension Plan system in the 1960's, upon which
many Canadians made plans for their future retirement. These Canadians
have made contributions to a system that they believe entitles them
to a guaranteed return.
The Canada
Pension Plan promises were initially formulated to ensure that seniors
did not spend their latter years in poverty, but, the Social Gospel
principles upon which the Canada Pension Plan were founded have
been violated and that the Canada Pension Plan no longer functions
to meet the goal of eliminating seniors poverty in Canada. On the
contrary, it functions to increase poverty among younger generations,
and ironically will contribute to future poverty among seniors.
Many people however still hold the false idea that the Canada Pension
Plan is currently necessary to eliminate poverty among the elderly.
The Myth of Senior's Poverty
Although some seniors
still have low levels of income, they have made significant gains
in the past thirty years. As a group, they are surpassing the same
levels of income earned by those under thirty , but we still see
the same levels of income assistance for seniors. Local governments
and businesses still providing discounts for seniors is an example
of this.
Seniors
are not as poor as they were in the past and if current trends hold,
they will continue to enjoy lower than average levels of poverty
in the future. Statistics Canada states that, the incidence of low
income fell faster for seniors than for Canadians overall. Senior
households headed by men dropped from 11% to 7% and senior households
headed by women fell from 18% to 14%. For all families incidence
of low income fell from 14% to 11%.
The true
levels of poverty for seniors are actually inflated. "Disposable
income" is a better indicator of whether seniors are in poverty.
Although senior's levels of income may be lower, many seniors have
completed paying off their mortgages and have finished purchasing
large capital items, such as washing machines, furniture, etc. Many
seniors, lacking in mobility, and commuting needs, do not incur
the high costs of owning an automobile. These differences in lifestyles
lessen expenditures and increase disposable incomes.
The true
levels of poverty among seniors is also inflated because measurements
of low income do not take into account that many seniors are asset
rich. Many seniors may have low incomes but own homes worth hundreds
of thousands of dollars. These seniors could take advantage of this
wealth through reverse mortgages or lifetime lease arrangements.
Many of our poorest seniors choose not to use this wealth to provide
income, since increasing their income would mean a decrease in government
funding from programs like GIS (Guaranteed Income Supplement). However,
this wealth is still an available source of income.
Although
poverty among seniors is no longer a significant issue, low income
and underemployment is widespread among post-boomer generations,
particularly Generation-X (1960-1966) and the Baby-Bust (1966-1979)
Generations.
The Baby Boomer Wall
Demographic
changes have had a significant impact on the employment/income/saving
levels for post-Boomer generations. Statistics Canada cited the
Baby Boom as the main cause of younger Canadians not being able
to find higher paying permanent employment. "...youth wages started
falling in the mid-70's when this larger generation (Baby Boom)
began to crowd the labour market. By slowing their advancement,
the recession prolonged the labour market congestion for younger
people." This demographic factor means that post-Boomer generations
will be unable to maintain income/employment levels necessary to
save adequately for their retirement. Analysis of Situation:
Conclusions
Due to the
labour market effects caused by the Boomers, those generations closely
following this generation will not be able to generate an income
necessary for them to have adequate savings for retirement. This
economic disadvantage, coupled with increases in the taxation needed
to maintain social spending promises and combined with external
global competitiveness pressures, will lead to a situation where
current social spending will create widespread poverty among future
generations of seniors.
Obligations within the Judeo-Christian Tradition
Obligation to the Poor
Even among
the earliest of Jewish and Christian traditions the protection of
the poor is a primary obligation.
"Because young persons and old
persons are often vulnerable due to their dependence on others,
this tradition places emphasis on their needs. Both the old and
the young have their just claims, preached the Hebrew prophets,
and one is not to be pitted against the other. The Holiness Code
(Lev. 19), a cornerstone of Jewish ethics, requires, orphans,
blind people, deaf people, and elderly people be given special
care."
It is clear
from the Hebrew Scriptures (Deut. 24:19) and New Testament (MT 25:40),
and the early Christian traditions that Christians have an obligation
to protect the poor. It also seems clear that by fulfilling these
obligations to the poor that our societies will be blessed by God.
These obligations
to the poor and economically dispossessed does affirm the need for
a social safety net like the Canada Pension Plan, but since Canada
Pension Plan's current universality threatens to impoverish younger
generations, this obligation to the poor can call us to challenge
the current form of the Canada Pension Plan.
Honouring the Elderly
Some may
see the Biblical obligation upon the young to honour the elderly
(Leviticus 19:32, Proverbs 19:32) as an argument to support the
Canada Pension Plan. While this biblical authority may challenge
the ageism directed against the elderly in our society and create
an obligation to maintain the economic dignity of the elderly, it
does not equate into providing increased income to well off seniors.
Obligation: Keeping Promises to the Elderly
The federal
government has made promises to Canadians that they will receive
Canada Pension Plan when they retire. Schedules of Canada Pension
Plan payments were published and people made plans for retirement
based upon them.
Our tradition
knows that we are called to keep promises (Exodus 20:16, Proverbs
19:22) that are made. Christians clearly are called to keep the
promises that they make. Promise keeping is also a response to God's
faithfulness. Since God keeps promises to us, in response we too
keep our promises.
Is it obvious
that the government should fulfill the obligations that it promised
to seniors? If these promises were taken by themselves as the sole
point upon which to make our decision then the answer would probably
be "Yes". If, however, we look at competing promises and the nature
of the Canada Pension Plan promise, the conclusions about honouring
Canada Pension Plan promises become more complex.
Let us first
look at who made these promises. In the 1960's the federal government
decided to create the Canada Pension Plan. Governments in liberal
democracies are a formation of the general will of the voting population
of the day. In a sense, the generations of the 1960's produced a
Canada Pension Plan system that relied on the contributions of yet
unborn Canadians. These generations created an obligation for future
generations without the consent of the future generations.
It is not
so easy, however, for one generation to avoid the responsibilities
of past governments. If promises were so easily dispensable the
consequences would be tragic. For example, we could drop obligations
and laws by saying, "Heck ... past generations made those dumb laws."
However, in the case of the Canada Pension Plan, there is some indications
that the generations of the 1960's should have known that they were
designing a system that called for an unjust burden on future generations.
The demographic patterns of the Baby Boom combined with actuarial
figures clearly showed that the plan was unsustainable unless it
called for increases in payments by young people. One could argue
that the Canada Pension Plan from its inception incurred an obligation
on future generations in bad faith, since it did not honour other
overarching promises and obligations, covenantal intergeneration
mutuality being one of these obligations.
Covenantal Mutuality
An important
obligation according to Judeo-Christian principles is the maintenance
of covenantal mutuality between generations. We are called to live
in relationships that are mutually affirming. It is my position
that the current Canada Pension Plan over-provides for the well-being
of the elderly at the expense of the well being of younger generations.
Therefore the Canada Pension Plan violates "Covenantal Generational
Mutuality".
By placing
too great a financial burden upon younger generations, through excessive
taxation and Canada Pension Plan contributions, older generations
are limiting younger generation's ability to address other social
ills and increasing the amount of elder-poverty for future generations.
It is true
that the old, while they hold power (or still retain) power, have
an obligation to exercise power judiciously:
"One generation owes to the next
that strength by which it can come to face ultimate concerns in
its own way - unmarred by debilitating poverty or by the neurotic
concerns caused by emotional exploitation."
Covenantal
Generational mutuality could be a basis for arguing that current
Canada Pension Plan levels are necessary for the the elderly to
exercise their own liberty and need for finding meaning. But since
I have shown that many seniors are able to maintain themselves above
the low income cut off, the Canada Pension Plan functions more to
maintain some seniors in well off lifestyles rather than providing
them with the means necessary to function within society. The mistake
that some make is the equating of money with liberty and meaning.
Does "meaning" from a Judeo-Christian perspective equate to giving
non-poor people money? Of course not!.
Since pensions
disrupt the relationship between generations by asking young people
to give too great of a financial sacrifice in order to meet the
consumer expectations of the elderly, the Canada Pension Plan must
be seen as violating covenantal generational mutuality.
The consequences
of violating this obligation is important. Without a concern for
covenantal generational mutuality, our society falls prey to individualism.
If younger generations do not take care of the elderly then the
elderly will fall into self-focused individualism. Likewise, if
older generations overly burden younger generations the young will
become self-focused individualists.
Since older
generations were the ones that constructed the Canada Pension Plan
and related seniors social safety nets, they have a primary responsibility
to shoulder the burden of changing these systems. Older Canadians
need to ensure that we reaffirm mutuality and thereby create an
community where we see ourselves as a "community of intertwined
generations."
Individualism and the Overvaluing of Individual
Liberty
Why do some
elderly become passionately opposed to any cuts to the Canada Pension
Plan program? It is my position that some elderly are motivated
by an over-inflated perceived need for individual liberty. They
protect their pensions in order that they have the economic capacity
to choose more directions in their life.
"The
predominant form of meaning available to the aged is a shallow
consumerism that has no natural stopping point and no goal other
than its own perpetuation. ...it validates a self-centred preoccupation
with ones own amusement and comfort."
This protection
of economic liberty would be acceptable if it did not come at the
expense of the liberty of other generations. Seen in individualistic
terms, the elderly want to maximize their own economic liberty at
the expense of the young.
The overvaluing
of individualism in our society also creates the situation where
the elderly do not see obligations as being inherent in intergenerational
relationships. It is quite common to hear elderly make comments
like "We built this country." Older generations assume an implicit
contract motivated by self interest, ie. because they put in now,
they get to take out later. They feel they have a contractual claim
upon younger generations. It seems that little regard is given to
the consequences of their perceived contractual claims. Instead
of seeing themselves as being in a mutual self-giving covenant,
they perceive themselves as individuals (or generations) with contracts
that must be fulfilled by future generations, even if it was older
generations who designed the obligations without the consultation
of those who would be fulfilling the obligations.
We must
be careful not to harshly judge older generations. High individualism
among seniors is understandable given the reduced roles that we
give the elderly in our society . Ageism in most North American
communities relegates the elderly into nonessential roles, thereby
creating the situation where the elderly can become self focused
and unable to fulfill intergenerational covenants.
"To
the extent that the contemporary world does not offer elderly
persons social roles full of meaning, they are at risk of lapsing
into anomie, feelings of worthlessness and resentment, and self-preoccupation."
I am also
aware of the danger that my own analysis can fall prey to an individualistic
interpretation. We need to be aware that it is our society that
creates the situation whereby the elderly have lost sight of their
role in covenantal mutuality. Our society needs to be able to find
meaningful roles for the elderly in order that the elderly do not
become self-occupied and overly demanding of the resources of young
generations.
"...
individualism entails difficulties in seriously considering the
idea of a substantive good for persons beyond the mere freedom
to choose, and in conceiving of individual lives as part of a
cycle of generations."
We need
to move past individualism and work to design systems that affirm
the elderly, and eliminate poverty within all generation. This requires
us to change the Canada Pension Plan system and other senior's social
safety nets to relieve the burden on the young. We also need to
work to allow the elderly a meaningful place in our society so that
they do not fall into consumeristic individualism.
Conclusion: An Ethical Response
Many issues
related to resource allocation in relation to generations are likely
to become more numerous as our society ages. Our cultures have been
youth-orientated and we have generally overlooked the impact of
the aging of society. Since over 1/4 of our society will be aged
by the middle of the next century, these issues can not be ignored
by the church.
Almost nothing
has come out of churches and synagogues to address the issues of
resource allocation and an aging society. Currently the median age
of many mainline Christian congregations is well into the sixties
, and it seems fair to ask how many elderly will be willing to address
these issues. It remains to be seen whether the elderly will act
to find a mutually affirming situation or whether they will they
use their religious knowledge and power to manipulate the young
into meeting their particular generations perceive economic/consumer
needs.
Our religious
communities need support systems that provide the elderly with meaningful
roles in society or we will be consigning the elderly to consumer-individualism.
We need to teach the inevitability of aging as part of God's plan
for the human race as illustrated in all genres of Old Testament
literature (ie. Gen 3:19, 1 King 2:2, Isa 40:6-7: Ps 39:4; Eccl.
3:1-2) . We need to show our society that the elderly can have meaningful
roles in society and in our communities that affirm them and provide
honour and dignity. We need to find ways to support covenantal generational
mutuality.
An important
aspect in changing the way we think of eldership is changing how
we acknowledge the various losses that accompany growing older (Gen
27:1; 1 King 1:1-4; 2 Sam. 19:35; Eccl. 12:1-8). We have neglected
to teach the elderly the inevitability of loss that comes with old
age. We are seeing therefore a compulsive holding onto what ever
economic gain the elderly can achieve through federal social policy.
This inability to accept loss is seen most vividly in social debates
where suggestions are made that the elderly use reverse mortgages
to meet their current economic needs. This suggestion is often met
with hostility and charges that it is unfair to ask them to give
up what they have gained.
Our Judeo-Christian
tradition does not value wealth as a source of meaning. The "meaning"
provided by individual wealth and systems like the Canada Pension
Plan is essentially empty. The Bible says that blessing comes to
the elderly in the form of increased wisdom (eg Deut 32:7; Job 12:12,
32:6-7) , but with blessings comes responsibility, as seen in the
parable of the talents (Mat 25:14-30, Luk 19:12-27). The elderly
receive the blessing of wisdom and are obligated to use this for
the upbuilding of our society; through the fulfillment of this obligation
the elderly receive meaning and self worth. Mutual blessing seems
to be the intention of God, providing the elderly with wisdom and
the young with strength. These blessings need to be used to promote
generational covenantal mutuality. In simplistic terms, the youth
use their strength to provide wealth so the elderly can escape poverty,
and the elderly provide wisdom in order that the young can be nurtured
and guided in building a healthier society.
The Canada
Pension Plan in its current form over burdens younger generations
and impedes their ability to provide for themselves and to save
for retirement. The Canada Pension Plan also prevents the elderly
from exercising their gifts by placing too great an emphasis on
consumer individualism. Even though there may have been obligations
promised to older generations, there are previous overriding obligations
that are inherent within generational covenants. As a society, we
should endeavour to meet as much of the Canada Pension Plan promises
as possible, but only if this does not come at the expense of younger
generations. Clearly we will not be able to meet some of the Canada
Pension Plan obligations. This, however, does not preclude the changing
of our society so that a fuller life can be provided for the elderly,
and a more mutually enriching relationship between generations sought.
Endnotes
1. Mary Anne Burke, "Implications of An Aging Society"
Canadian Social Trends No. 20 (Spring 1991), 6-8.
2. Edward Ng, "Children and Elderly People: Sharing
Public Income Resources" Canadian Social Trends No. 25 (Summer 1992),
12-15.
3. Raj Chawla, "Dependency Ratios" Canadian Social
Trends No. 20 (Spring 1991), 3-5.
4. ibid.
5. Pierre Gauthier,"Canada's Seniors," Canadian Social
Trends No. 22 (Autumn 1991), 16-20.
6. ibid.
7. ibid.
8. Ted Wannell, "Losing Ground: Wages of Young People,
1981-1986," Canadian Social Trends No. 13 (Summer 1989), 21-23.
9. S. Post, "Justice for Elderly people in Jewish
and Christian Thought", Too Old for Health Care pg 121.
10. ibid.
11. ibid.
12. "Covenantal mutuality between young and old people
is at the very centre of Jewish thought, so that any pragmatic'
disregard for aged persons violates a basic norm of reciprocity.
(see Heschel, 1959) S. Post, "Justice for Elderly people in Jewish
and Christian Thought", Too Old for Health Care pg 122.
13. "Erikson defines Mutuality as ' a relationship
in which partners depend on each other for the development of their
respective strengths. ... The generations are dependant on each
other not only for physical necessities but also for a confirmation
that their efforts have brought forth worthy fruit, and for the
promise that a life lived according to the meanings available in
out culture can be replete with meaning all the way through." -
Thomas H. Murray, "Too Old for Heath Care?"
14. Thomas H. Murray, "Too Old for Health Care? Quoting
Erik Erikson. ph 175.
15. ibid Pg 179.
16. ibid Pg 179.
17. ibid Pg 172.
18. ibid Pg 175.
19. ibid Pg 171.
20. S. Sapp, "Aging Spirituality and Religion" 1995
pg 187.
21. ibid Pg 187.
22. ibid Pg 188.
23. ibid Pg 188.
24. ibid Pg 188
Bibliography
Anderson, T., Walking the Way: Christian Ethics
as a Guide, Toronto: UCC Pub., 1993
Binstock H. & Post S. Editors, Too Old for
Health Care, Baltimore: Johns Hopkins University Press, 1991
Burke, M., "Implications of An Aging Society" Canadian
Social Trends No. 20 (Spring 1991)
Chawla, R., "Dependency Ratios" Canadian Social Trends
No. 20 (Spring 1991)
Gauthier, P.,"Canada's Seniors," Canadian Social Trends
No. 22 (Autumn 1991)
Ng, E., "Children and Elderly People: Sharing Public
Income Resources" Canadian Social Trends No. 25 (Summer 1992)
Kimble, M. Ed., Aging Spirituality and Religion
Minneapolis:Fortress Press, 1995
Wannell, T., "Losing Ground: Wages of Young People,
1981-1986," Canadian Social Trends No. 13 (Summer 1989)
|
