Liberals and retirement policy.
One pleasant surprise (for me) in the Liberal platform is an announced plan to create a federally regulated reverse-mortgage program for seniors. They're calling it MEANS (Mortage Equity Access Now for Seniors -- see p. 19), and, the way they describe it, the goal is to create a more viable way for seniors to sell off equity in their family homes.
This is important. The big problem inherent in the neoliberal and neoconservative property-ownership push we've seen over the past 30 years in the West is that it results in retirees who own a lot of durable assets (houses and their trappings) but little liquid accumulation (RRSPs and their equivalents). Home ownership is way up; long-run personal saving is way down. Not only is liquidating durable assets difficult, but studies show that selling off and leaving the family home is often a traumatic and unsettling experience for retirees who have grown attached to their houses. The economic literature has found that selling a home is often associated with another traumatic lifecycle event, like a health care crisis or a spouse's death. Leaving the family home is unpleasant. And the problem will grow more accute as the home-owning babyboomer generation retires.
The obvious solution to the durable-asset, low-liquidity trap is the "reverse-mortgage", by which retirees essentially sell their home or other property back to the bank for while continuing to live in or use it until they die. But people have been extremely reluctant to turn to market-based reverse mortgages to liquify their property. The econ literature generally blames some sort of market failure, like life-span moral hazard. (This could take the form of people who know but can hide the fact that they're going to live forever signing contracts for fixed monthly sums from the bank while they keep living in the house; or banks afraid of this practice only offering cash terms that healthy seniors won't accept because they'll lose too much of the value of their house). But the problems might also be psychological: the unpleasantness of having to return a property you spent your life acquiring to the people you acquired it from.
In either case, government intervention can help, either by offering insurance or by regulating the banks to force actuarially-fair terms for the reverse-mortgages. By facilitating the use of reverse-mortgages, the government might also also help kill the stigma associated with using them. The result -- seniors keeping their homes and using their equity to pay for groceries (though maybe at the expense of their heirs) -- is potentially win-win.
(All this is general of course. I haven't actually read the details of the Liberal MEANS plan, only the spin in the platform. But it's definitely the right thing for the Party to be thinking about.)
Speaking of Liberal accomplishments in senior welfare, this is also true (and my subject of quasi-expertise I might add):
Canada's support for seniors is one of the major success stories of government policy in the post-war era. For example, Canada is unique among nations in terms of the effectiveness and sustainability of its retirement income system. Thanks to reforms in recent years, the Canada and Quebec Pension Plans are actuarially sound for the next 75 years, something few nations can claim. Canadians can count on their public pensions.
The credit for this spans several governments, but the basic point is true. It's also enormously important as a look at recent US political experience proves. The Liberals' recent expansion of the GIS credit (not tied to lifetime earnings like the CQPP but rasing the minimum income floor at which a Canadian senior must live) will also keep senior poverty from rising again in the near future.
So a plea: Canadians want an electoral choice. That's only natural. But the Tories have proved at this point they are viable; a look at the polls suggests as much. On the merits, despite their abysmal campaign, the current Liberals deserve another term, both for their past successes and their vision of the future. I couldn't believe this more strongly (caveats, er, notwithstanding).
This is important. The big problem inherent in the neoliberal and neoconservative property-ownership push we've seen over the past 30 years in the West is that it results in retirees who own a lot of durable assets (houses and their trappings) but little liquid accumulation (RRSPs and their equivalents). Home ownership is way up; long-run personal saving is way down. Not only is liquidating durable assets difficult, but studies show that selling off and leaving the family home is often a traumatic and unsettling experience for retirees who have grown attached to their houses. The economic literature has found that selling a home is often associated with another traumatic lifecycle event, like a health care crisis or a spouse's death. Leaving the family home is unpleasant. And the problem will grow more accute as the home-owning babyboomer generation retires.
The obvious solution to the durable-asset, low-liquidity trap is the "reverse-mortgage", by which retirees essentially sell their home or other property back to the bank for while continuing to live in or use it until they die. But people have been extremely reluctant to turn to market-based reverse mortgages to liquify their property. The econ literature generally blames some sort of market failure, like life-span moral hazard. (This could take the form of people who know but can hide the fact that they're going to live forever signing contracts for fixed monthly sums from the bank while they keep living in the house; or banks afraid of this practice only offering cash terms that healthy seniors won't accept because they'll lose too much of the value of their house). But the problems might also be psychological: the unpleasantness of having to return a property you spent your life acquiring to the people you acquired it from.
In either case, government intervention can help, either by offering insurance or by regulating the banks to force actuarially-fair terms for the reverse-mortgages. By facilitating the use of reverse-mortgages, the government might also also help kill the stigma associated with using them. The result -- seniors keeping their homes and using their equity to pay for groceries (though maybe at the expense of their heirs) -- is potentially win-win.
(All this is general of course. I haven't actually read the details of the Liberal MEANS plan, only the spin in the platform. But it's definitely the right thing for the Party to be thinking about.)
Speaking of Liberal accomplishments in senior welfare, this is also true (and my subject of quasi-expertise I might add):
Canada's support for seniors is one of the major success stories of government policy in the post-war era. For example, Canada is unique among nations in terms of the effectiveness and sustainability of its retirement income system. Thanks to reforms in recent years, the Canada and Quebec Pension Plans are actuarially sound for the next 75 years, something few nations can claim. Canadians can count on their public pensions.
The credit for this spans several governments, but the basic point is true. It's also enormously important as a look at recent US political experience proves. The Liberals' recent expansion of the GIS credit (not tied to lifetime earnings like the CQPP but rasing the minimum income floor at which a Canadian senior must live) will also keep senior poverty from rising again in the near future.
So a plea: Canadians want an electoral choice. That's only natural. But the Tories have proved at this point they are viable; a look at the polls suggests as much. On the merits, despite their abysmal campaign, the current Liberals deserve another term, both for their past successes and their vision of the future. I couldn't believe this more strongly (caveats, er, notwithstanding).
2 Comments:
I can't stop thinking -- what a reasonable country you have!
Wait til the 23rd to see how reasonable we are, Neil. I'm not too optimistic.
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