Life is full of inequities.
Some people make more money. Others drive nicer cars and live in larger homes.
This week's agreement between Ottawa and eight of the provinces to enhance the Canada Pension Plan fills an important gap – providing a substantial boost in benefits for millions of workers who are not saving enough now to retire.
For example, an employee earning about $50,000 a year will receive a worry-free annual CPP payment of about $16,000 during retirement, versus $12,000 now. The changes are designed to replace a third of pre-retirement earnings, up from a quarter.
That's all good.
But the changes do nothing to narrow the large and politically divisive gap between the haves and have-nots of the Canadian retirement landscape.
The awkward reality is that the pension haves overwhelmingly work in the public sector. They are teachers, health-care workers, civil servants and police.
They are among a fortunate but dwindling minority of the working population that has the gold standard of pensions – a defined benefit plan that pays out a guaranteed income for life, adjusted for inflation. A typical public school teacher in Ontario, for example, can earn an annual pension equal to 60 per cent or more of what they were paid during their best earning years, with part of it transferable to a spouse when they die. And with enough service, teachers can often retire in their 50s with full benefits.
As recently as 1977, more than half of the working population had some form of workplace pension. By 2013, the share had fallen to 37.9 per cent, continuing a steady long-term decline, according to Statistics Canada figures.
In all, about 6.2-million Canadians had a workplace pension in 2013 – 51.5 per cent of them in the public sector.
It's a much smaller club that has a defined benefit pension, with guaranteed, stable incomes for life – 4.4-million. And nearly 70 per cent of them work in the public sector.
The decline in workplace pensions parallels a shift of jobs to self-employment and smaller companies, where workplace pensions are rare. Many companies that still offer pensions have switched to so-called defined contribution plans, in which workers and employers contribute preset amounts into individual retirement accounts. However, benefits are uncertain, because they depend heavily on individuals' investment acumen, both before and after retirement.
The main target of the expanded CPP is the large and growing group of middle-income Canadians who do not have workplace pensions and do not save enough on their own. The CPP will make sure these workers and their employers stash more away for their retirement.
On balance, that seems like a sensible public policy trade-off.
Unfortunately, the deal worked out between Ottawa and the provinces is not targeted in that way. Most workers will contribute more to the CPP and get more out in return, regardless of their current situation. It leaves the thorny problem of pension envy unaddressed.
One solution is to confront public sector unions and scale back the generosity of their pensions.
The other way to narrow the gap, of course, would be to make the enhancements mandatory only for those who do not already have a workplace pension. Everyone else would be exempted. That would have allowed the CPP to replace a larger share of pre-retirement income and narrow the gap with public sector pensions, argued Bob Baldwin, an adviser to the Ontario Expert Commission on Pensions and a former Canadian Labour Congress official.
"The reform is doing less for people who need it and what's appropriate … and too much for people who already belong to a workplace plan," Mr. Baldwin pointed out.
Even with the reforms, many lower income earners who do not have a workplace pension will "continue to have a tough time saving on their own for retirement," he said.
So while the reform is a step in the right direction, it is also a missed opportunity to resolve some of the broader pension issues facing the country. It is a half-measure that fixes half the problem.