Should we raise the retirement age? That’s what an opinion article in the Hamilton Spectator last week proposed.
The author argued his case using data on life expectancy (LE). He noted that back in 1965, when Canada Pension Plan began, LE for men was 66.8, for women 73. He then stated that, since the pension age was 65, men only got CPP for a year or two, women for eight years. He stated: “That’s not much of a retirement.” But now we live much longer so CPP has to pay out for much longer and we can’t afford it.
Sounds plausible? But like so many simplistic ideas, it’s wrong. I wrote a letter to the paper which appeared today that explains the flawed reasoning. Here it is:
The basis for the argument that we must raise the Canada Pension Plan retirement age is seriously wrong.
Life expectancy (LE) at birth in 1965, when the CPP began, was 66.8 for men, 73 for women. So the author claimed that CPP only had to pay out for a year or two from age 65 for men and eight years for women.
But the author mistakes LE at birth for LE at age 65. LE at birth is the average age to which new babies will live. Its calculation includes deaths before age 65 which reduce the average. To learn how long people will get CPP, you must use LE at age 65: how much longer people who make it to 65 can expect to live.
Statistics Canada calculations for 1965-67 show LE at age 65 was many times what the author claimed: 13.6 years for men, 16.7 for women. The latest figures are 19.5 years for men, 22.2 for women — certainly an increase, but not so drastic that the system can’t cope. True, a higher proportion of us reach 65 now, but we all make the necessary CPP contributions.
The author claimed that CPP must be worried. That’s not true. The Chief Actuary of Canada projects that CPP is sustainable for many decades.
White-collar work like the author’s can be done beyond 65. But there are many jobs which people cannot do indefinitely. Those workers deserve the chance to enjoy their retirement after years of hard labour.
Harry Shannon, Hamilton