Mandatory Retirement

Retiring mandatory retirement
Last Updated December 12, 2006

CBC News

Effective Dec. 12, 2006, employees in Ontario are no longer required to quit working at age 65.

This amendment to the Ontario Human Rights Code prevents seniors from facing age discrimination at work and makes mandatory retirement illegal in the province.

The Ontario legislature passed the amendment in December 2005, but gave employers a one-year transition period that ended Dec. 12, 2006.

The province estimates about 4,000 of the 100,000 Ontario residents turning 65 each year will take advantage of the new law.

Ontario joins Alberta, Manitoba, Quebec, Prince Edward Island, Nunavut, the Yukon and the Northwest Territories in banning mandatory retirement.

Bankers love the concept of mandatory retirement, or any other form of retirement. It means big money for the banks, who regularly fire up ads such as, “What are you doing after work?” And, “You’re 20, you should be thinking of retirement.”

The big season for bankers is the February run-up to the deadline for RRSPs, when they try to scare the daylights out of people by warning them if they don’t have $800,000 – or $500,000, or $1 million – socked away when they turn 65 they soon will be pushing their worldly goods ahead of them in a cart or living in a walk-up, eating cat food.

Retirement is big business for banks. Bankers believe people hate their jobs as much as bankers hate theirs, so they set out to convince people that retirement – Freedom 55 … Take This Job and Shove It – is the solution to worry and the road to happiness.

And yet, and yet … many people enjoy their jobs and dread being forced out of them merely because they have turned 65, which is a lot younger than 65 used to be in the 1920s, when pensions began. Someone turning 65 today is expected to live another 20 years.

It has been shown that those with the most education tend to enjoy their work and are reluctant to be turfed out at 65. Do you think for a moment that when Margaret Atwood turned 65 – on Nov. 18, 2004 – someone told the illustrious Canadian writer, “Jig’s up, Atwood. No more novels for you.”

“But… ”

“Sorry, Peg, you’ve been at this game a long time. We need to make room for younger writers.”

The concept of retirement, especially mandatory retirement, is fairly new. It began in the early decades of the 20th century. The first old-age pension in Canada began in 1927, financed by the federal and provincial governments, but administered by the provinces. It was available to Canadian citizens 70 years or older. The pension amounted to $20 a month, a munificent $240 a year, but only if the Canadian citizen passed a strict and demeaning means test.

This was the situation for nearly 25 years.

In 1951, Ottawa introduced the Old Age Security Act, which was administered by the federal government to all Canadians 70 and over – without a means test. Accompanying this legislation was the Old Age Assistance Act, a cost-shared program between Ottawa and the provinces, which made pensions available to Canadians aged 65 to 69, but with a means test.

By 1964, the old-age pension rose to $75 a month, which everyone admitted was inadequate. This led to the Canada Pension Plan, introduced in 1965. The CPP requires workers and employers to contribute to a social insurance plan that provides a wage-related pension on retirement at the age of 65. Next came the Guaranteed Income Supplement program in 1966, which paid up to $30 a month extra to pensioners with little income other than their Old Age Security pensions. The age for receiving Old Age Security was also lowered from 70 to 65.

There has been a sea change in attitudes to public pensions and the very concept of retirement, both mandatory retirement and early retirement. When the age of 70 was selected in the early 20th century as the age of eligibility for a government pension, life expectancy was between 60 and 65.

Because people live so much longer, and retire so much earlier, Ottawa has demanded higher contributions to the Canada Pension Plan so it won’t dry up. There will be increased demands to raise CPP contributions in coming years as the parade of boomers opt out of the work force.

Compulsory retirement is especially hard on women, many of whom chose to stay home to be with their children in the early years, then entered the work force in their late 20s or early 30s. Because they were, and often still are, paid significantly less than men, women aren’t able to put away as much money as men. And it gets worse down the line, as women live six, seven years longer than men.

According to Canada’s Urban Futures Institute, some 9.8 million Canadian baby boomers are approaching retirement. By 2020, the number of Canadians retiring each year will be 425,000.

Today there are six workers in Canada for every retired person. By 2020, there will be three workers for every retired person. The ratio will sink further without a dramatic increase in immigration, preferably people with lots of money and excellent job prospects.

This demographic shift is already making an impact in the United States, where the retirement age has been raised to 67 for those born after 1960 and is expected to be raised again, probably until it reaches 70 (which more accurately reflects the demographics and life expectancies of the near future).

We are an aging society and our aging population is accelerating rapidly. In 1973, only seven per cent of Canadians were 65 or older. By 2005, about 13 per cent were over 65. By 2023, 20 per cent of Canadians will be over 65. And by 2041, 23 per cent will be seniors. Increasingly, the worry is a shrinking work force.

Some companies are coping with this workforce shortage by instituting plans such as “retirees on call” and “phased retirement.” These plans address the arguments of employers who favour compulsory retirement because it unloads workers who are at the peak of their earnings, allowing the companies in some cases to hire two young workers for the price of one older worker.

For years Larry Folliott worked for IBM Canada Ltd. as a mergers and acquisitions expert. He retired at 57 to become an “IBM retiree on call,” which means he can “goof off” to Maui for weeks at a time with his wife, play golf with his male buddies in South Carolina, but be ready to head back to the office anytime IBM needs an extra hand with mergers and acquisitions.

Another company encourages retired CEOs to return to work for less pay and less authority, working for people who used to be their underlings, but bringing with them vital experience, smarts and coaching expertise. One man who took advantage of this arrangement said it finally answered for him the question, What is happiness? “Happiness,” he said, “is working at a job you enjoy for which you are vastly overqualified.”

Bankers are correct in assuming most people don’t like their jobs and want to retire if they can afford to. Only six per cent of workers continue to work full-time after the age of 65. The average age of retirement in Canada is 62. But the six per cent who want to keep working do so for a variety of reasons, including office camaraderie, job satisfaction, a sense of purpose and destination – and sometimes economic survival.

The geography of a country like Canada also comes into play. If public pensions total, say, $15,000 – the amount can vary widely, depending on extra benefits – it makes considerable difference whether these pensioners live in Toronto or Portage la Prairie, Man. You could almost make it on $15,000 a year in Portage, but in Toronto $15,000 might keep you going three, four months.

Many overestimate the joys of retirement. After a summer or two of playing golf or watching birds or afternoon soaps, they come to appreciate what Shakespeare meant when he wrote, “If all the year were playing holidays, to sport would be as tedious as to work.”

———————
Regional breakdown of retirement rules

Province or territory and their rules
Nunavut — No mandatory retirement age.
Northwest Territories — No mandatory retirement age.
Yukon — No mandatory retirement age.
British Columbia — Mandatory retirement at age 65 if required by employer.
Alberta — No mandatory retirement age.
Saskatchewan — Mandatory retirement at age 65 if required by employer.
Manitoba — No mandatory retirement age.
Ontario — In June 2005, Queen’s Park was planning to end mandatory retirement at age 65.
Quebec — No mandatory retirement age.
New Brunswick — In June 2005, the Lord government was planning to outlaw mandatory retirement except in jobs where public health and safety are concerned.
Nova Scotia — There is mandatory retirement at age 65 if required by employer. However, the employer must treat all employees equally.
Prince Edward Island — No mandatory retirement age.
Newfoundland and Labrador — Retirement age can be set under terms of a retirement or pension plan. Where no such agreement exists, mandatory retirement cannot be enforced until age 65.

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