This page has been archived and commenting is disabled.
Canadians Want Expanded CPP
Bill Curry of the Globe and Mail reports, Majority backs expanding Canada Pension Plan, poll finds (HT: Bernard Dussault):
Proposals
to expand the Canada Pension Plan are far more popular than the latest
government plans for a new private-sector option, according to a new
Environics survey conducted for the Canadian Union of Public Employees.
Federal Finance Minister Jim Flaherty originally supported the
idea of increasing premiums over time to pay for higher CPP benefits,
however he announced in December he did not have enough provincial
support to move ahead.
Instead, Mr. Flaherty secured the
provinces’ support for a new pooled pension plan that would be managed
by private-sector firms. Talks are currently underway to negotiate the
details.
Public sector unions, including CUPE and the Canadian Labour Congress, oppose the new plan and prefer an expanded CPP.
According
to the survey, 76 per cent of respondents support increasing CPP
benefits and 51 per cent oppose the current federal approach to delay
CPP reform in favour of a private pooled pension plan.
The survey also found 81 per cent of respondents agreed it is important
that retirement security be debated in the next federal election.
NDP Leader Jack Layton has included enhanced CPP benefits among a list of NDP demands for the federal budget in March.
The survey of 1,001 Canadians was conducted between Jan. 6 and Jan. 11.
It has an error margin of plus/minus 3.2 per cent, 19 out of 20.
The
results of this poll do not surprise me. There is pension angst among
Canadians who are realizing that their retirement dreams are slipping
further and further way. And as more and more companies scrap
defined-benefit plans to replace them with defined-contribution plans --
effectively placing the retirement onus entirely on individuals --
pension poverty will only get worse.
And pension poverty isn't just a Canadian problem. In the UK the BBC reports, Pensions timebomb to be studied by Lord John McFall:
Many
young people are facing a "long retirement spent in poverty",
according to the head of a new review into private sector pensions.
Lord
McFall, the former chairman of the Treasury Committee, has been
commissioned to investigate the state of the sector by the National
Association of Pension Funds (NAPF).
The review comes after a NAPF poll found 55% of workers believe they have insufficient retirement savings.
The report will be finished in October.
Longevity
The
pensions landscape has been changing as people in the UK are living
longer, and many occupational pension schemes have become less
generous.
With families feeling the financial squeeze,
pensions have dropped down the list of priorities for some workers, the
poll suggests.
Some 43% of those asked said that they could not afford to save for retirement.
Lord
McFall's review will be funded by, but independent of, the NAPF. He
said that this was a particular issue for young workers who were
already facing a burden of debt.
And this was despite
changes, being introduced in 2012, that will see workers automatically
enrolled into a pension scheme, unless they earn a very low wage or opt
out themselves.
"Half
the workforce in on a collision course with a long retirement spent in
poverty," Lord McFall said, adding it was "unacceptable that so many
will head into old age worried about how they're going to get by".
"Even
with auto-enrolment, up to nine million people risk being left behind,
and we have to make it easier for everyone to save more," he said.
"We will look at different types of pension and savings products, tax incentives, and the regulations faced by employers."
'Trust'
The
government's coalition document pledged to "reinvigorate occupational
pensions". The NAPF estimated that 19 million people out of the total
workforce of 28 million were in the private sector.
Lord
McFall said he wanted the review, called the Workplace Retirement
Income Commission, to provide evidence that would inform the
government's policy, as well as the increase employers' understanding of
pensions and educate workers.
He said it would also study how to reestablish "trust and confidence" in the workplace pensions system.
He
agreed with the results of the poll of more than 4,000 people, which
found that 79% of those asked said the UK required a simpler pensions
system.
When I think of the magnitude of the pension problem, I can't help but shake my head when I
hear of shortsighted measures based on "private sector" solutions. There
is a role for the private sector, but if we think banks, insurance
companies and mutual funds will make a difference, we're dreaming in
technicolor.
I said it before and I'll say it again. Canada has
some of the best public defined-benefit plans in the world. We also have
excellent private defined-benefit plans (HOOPP
comes to mind as the plan that performed the best during the 2008
crisis). So why aren't we building on these defined-benefit plans and
introduce more competition from the private sector to help manage the
funds? Why are we placing a bandaid on the pension tumor? It really is a
malignant tumor and no matter how well markets perform this year or in
subsequent years, it's only a matter of time before it comes back to
haunt us.
Canadians have voiced their opinion. They're worried
about their retirement and rightfully so. They're expected to manage
their own investments in schizoid wolf markets that are battering professional money managers.
I think it's high time Canadian politicians offer Canadians a fraction
of the same perks that they're entitled to, namely, a safe and secure
defined-benefit plan invested in both public and private markets. The
time for expanding CPP has come and we should think hard about how we're
going to include the private sector and who's going to manage the money
(I'm in favor of several large public funds not one big mammoth fund).
If we squander another opportunity to properly reform CPP, a whole
generation of Canadians will fall through the cracks and suffer the
indignity of pension poverty.
»
- advertisements -
Makes me wish I was Canadian. At least you won't go bankrupt the first time you get sick, and your oligarchy at least pretends that it doesn't exist to feed the remainder of the populace into the FIRE.
Canadians want better pensions, better health care, better education, better weather, NHL teams in the southern US to move back to Canada,yadda, yadda, yadda...
but most importantly of all, Canadians want to be taken seriously lol.
''Canadians want better pensions, better health care, better education, better weather..."
I think we all want better weather today! -)
That is why democracy is just mob rule. Why save for yourself when you can just get the government to take it from someone else. The CPP is a pooled pension plan and as such is just another form of wealth redistribution. When I hear the majority wants something it makes me cringe. The majority is always wrong and is the reason why our health care costs so much and has such long wait times.
casey13,
The truth is defined-benefit plans have outperformed defined-contribution plans because they are better managed and by pooling assets they can reduce fees. Sorry to be blunt, but the majority are right in this case. DB plans are no panacea, but they are infinitely better than the alternative.
It really does not mater to the individual investor if the total fund has done better. What matters is if you get what you put in back out. In the case of the CPP for a lot of investors that will be doubtful. It will be clawed back and reduced for those that have saved for themselves. Those that spent all their money on vacations, houses and SUV's will get more.
"...a whole generation of Canadians will fall through the cracks and suffer the indignity of pension poverty."
One percent returns. At best. We're moving to a permanent no-growth paradigm, and investment returns are reflecting this already. If nominal returns do somehow end up higher, retirees will pay instead with the falling purchasing power of their currencies. Get used to continuing stagflation.
Maybe we'd all better get used to the idea that millions upon millions of potential pensioners, throwing more and more money in the same markets and mostly NOT in wealth-producing industries, will find that SAVING money is not much different from "investing" it...
Think about it. How can every contributor expect a high - or even "secure" - living standard in retirement when their money is all invested in the same government or private funds? As a stock investor would put it, "who's left to do the buying"?
For these reasons, large-scale plans are doomed to mediocre returns. Any hope of success lies in taking a contrarian investment stance and self-managing one's own money.
... riiight....
We all know that poll was heavily sampled from the "Windsor" area, right across the river from Detroit.
Maybe the Federal Government can invest those CPP funds in government ventures too...
They could easily buy North American Treasury bonds.
If an individual will not look after their own interests, who should? At what cost?
Pioneering Canadians are not "high-maintenance whiners". In this matter, Government can't help them as they are the problem.