Social Security
Overview
A major part of my professional work is with social security systems, and within those, primarily income replacement systems for those who have left employment. Modern pension schemes and other income security systems are one of the four pillars of the New Deal. In fact, the U.S. Social Security System, which Bush II is trying to privatize, was inagurated on the date I’m writing this 70 years ago by President Roosevelt. That system began operation in January 1937. Pensions of one form or another have been around since at least the French Revolution.
When they are thought of at all, pension systems are regarded as an effective soporific. They’re the domain of some pretty sleepy types: actuaries, insurance executives and solicitors. Putting off thought about pensions is also typical human nature: the more remote the cost of some action or inaction, the more difficult it is to motivate to address it. That is the basic insight behind social policies to subsidize education, health insurance, and incentives to save for retirement. We’re myopic as individuals, and perhaps marginally more insightful as a species.
A little poking around reveals some interesting aspects, from social engineering to corporate scandals to global finance to the basic premise of a capitalist system: the accumulation and preservation of capital itself. Or, on the other hand, some Venezuelan colleagues of mine, who recently drafted and passed their Organic Law of social security, view social security systems as the way in which a society reproduces so that its citizens can work to produce. They claim that production and reproduction are an organic whole, and therefore, social security must be firmly linked to the productive economy.
Or, if media attention is a better marker of social worth, use a google news alert for “pensions” on any given day. You’ll find an amazing number of items mined from the English-speaking world’s financial pages on the in/adequacy of pensions. Last summer there were riots in France and Italy over pensions. Tony Blair’s government is twisting itself in knots trying to deal with Thatcherite privatization of state pensions. The World Bank has issued warnings and alerts about the predicament of ageing societies in the Middle East and North Africa. Funnily enough, in a country that once had a robust public sector, pensions in Canada garner far less attention than elsewhere in the world.
I work on the “nuts and bolts” of social security systems daily, but I try to participate in policy-level initiatives in my professional capacity. I participate on the Pension and Benefits Executive Committee of the Ontario Bar Assocation, and the Canadian Association of Pension Supervisory Authorities Model Law Committee. We make submissions to governments and attempt to push or influence policy agendas, with varying degrees of success. These associations themselves have internally divisions of interests (often referred to as “member side” versus “management side”), and, as with any regulatory effort, there is a mix of interests, ideas, actors and accident at play at any given time.
Links to Papers and Presentations
Here is a link to a paper on pensions and class actions.
Here is a link to a case comment on the Monsanto decision of the Supreme Court of Canada in 2004.
Here is a link to a set of slides on pensions and globalization from a conference of labour lawyers in Mexico, 2005.
Here is a link to a set of slides from a seminar on current pension issues in private pension plans at Osgoode Hall Law School in 2004.
Current Research Nodes
I have yet to develop a more focused research program for my interests in social security systems. I am currently working on two research papers that I think are useful contributions to the legal academic work in this area, and one research node that I am still trying to find a way to organize.
Are Pension Rights Human Rights? The first is an investigation into the characterization of pension rights and entitlements. Pension systems around the world range from public to private, from legislated rights to purely contractual rights. Typically, the law of private pension systems in Canada is considered something between contract law and trust law. But pension rights have a more diverse history, and I am arguing, a wider theoretical scope than the trust-vs-contact dichotomy. This question is not only timely in an era in which governments are attempting to decide whether pensions should be public or private systems, but also in an era in which the demographic of the voting public will, increasingly, want an answer to this question. (More acurately: they will want a favourable solution, but that requires an answer). As my tax law professor used to say, the oldies and the crips have the time to vote. Here, you can find the resources I am developing for this project.
What Are Deferred Wages? The second is an investigation into one of the main arguments deployed in pension law and in labour relations generally. Economic models describe the contribution of labour with capital to produce some commodity that is then re-sold, hopefully at a profit. Labour is given compensation for its contrbuted labour (including expertise, intellectual property, and other forms of skill or input into production). The most common form of compensation is wages, paid in arrears. The exact function of wages itself could be questioned: marxists, for example, have sometimes said wages are only enough for the labour unit to reproduce itself, and the value of labour is not adequately reflected by wages. Or wages themselves could be a form of insurance against the risk of the productive enetrprise: in exchange for surrendering an interest in the thing produced, wages are taken so the worker is not exposed to the risk of loss (or profit). Still others suggest wages are not any sort of bargain, but are more or less dictated by institutional arrangements, which themselves are merely conventions. Which was arguably the case in the early 1970s when Pierre Trudeau imposed wage and price controls in Canada in order to combat steeply rising price inflation. A standard first-year case in constitutional law was fought over the constitutionality of this legislation, the Anti-Inflation Reference. In truth, these controls were more wage than price controls, and unions at the time were faced with legislated limits to what they could bargain for on behalf of employees. Many of them turned to pensions, and this is one example of how pools of money set aside to pay a future income benefit could be conceived of as “deferred wages”. In labour law generally, it is typical to characterize wages as only one part of total compensation for labour, which also includes benefits programs, bonuses, pensions and perquisites (if you’re a high wage earner). This compensation is taxable, and so it is “income” within the meaning of the Income Tax Act. By now, you’re wondering why I’ve told you all this: because deferred wages have to take some form, such as a promise to pay in the future for something done today, or a pool of money set aside, or an interest in property of some sort. In other words, they strike me as being a type of claim half-way between wages-as-insurance-against-risk and no wages, but a form of claim on the value of production. The way we would characterize these deferred wages legally could be theoretically and practically interesting. Are they a form of property right, as in, right in the physical or intangible product of the combination of labour and capital? Are they merely some form of claim like other credtiors on a business’ assets? Are they merely promises, that is, contracts? I’ve really only started thinking about this problematic, and many of these questions are likely naive.
Office of the Superintendent of Financial Institutions
Financial Services Commission of Ontario
The Canadian Labour Congress on pensions.
Pension Benefits Standards Act, the federal statute governing private pensions.
Old Age Security Act, one of two federal public pension statutes.
Pension Benefits Act, the Ontario statute governing private pensions.
Seniors Programs and Policies.
Pensions and Benefits Magazine.