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Showdown at Kananaskis?
Bill Curry of the Globe and Mail reports, Provinces to push Ottawa on CPP improvements:
Provinces
are planning to fight for enhancements to the Canada Pension Plan at a
key meeting on Monday, setting up a showdown with the Harper
government over how Canadians will fund their retirements.
Just
days before federal and provincial finance ministers meet in
Kananaskis, Ottawa made a surprise move to reject CPP enhancements for
now in favour of a new privately run savings vehicle.
The shift in
federal priorities on pension reform comes as the Bank of Canada
heightens its warnings that Canadians are borrowing too much and saving
too little, putting some households at risk when interest rates
inevitably climb back from near-record lows.
Ottawa’s critics
insist long-term pension problems must be tackled now and premium
increases can be phased in, but the Harper government is aligning
itself with Alberta in arguing the economy cannot absorb a new hit on
the take-home pay of Canadians.
“I think all are agreed that
while we will continue to look at improvements, now is not the time for
CPP premium increases,” Prime Minister Stephen Harper said Thursday in
the House of Commons in response to objections from the NDP.
Ontario
Finance Minister Dwight Duncan said as far as he knows, Alberta is the
only province that opposes CPP enhancements. He said provinces are
working the phones Thursday planning to push the CPP option on Monday.
“It’s
just not acceptable in our view to put this discussion off,” said Mr.
Duncan in an interview. “A number of us, the provinces, have talked
over the course of the last number of hours and there’s still very
substantial support for moving forward [on CPP].”
Insurance
companies, business groups and the Alberta government praised Ottawa’s
proposal for a Pooled Registered Pension Plan (PRPP) as a targeted
response. One insurance firm, Sun Life, called it a “historic milestone”
that could expand pension coverage to millions of Canadians.
But
other provinces, national labour unions and federal opposition parties
insist another voluntary savings option will not address the fact that
millions of Canadians are not saving enough to maintain their current
living standard in retirement.
While the recession exposed the
harsh realities of high household debt, particularly in the United
States, it also exposed inadequate protection for workplace pensions in
cases like the bankruptcy of Nortel. Critics of Ottawa’s latest plan
are concerned the new pool of savings managed by the private sector
will not have the same level of protections as the CPP.
When
Ottawa and the provinces last discussed pensions in June, Mr. Flaherty
was a surprise advocate of a “modest” increase to CPP premiums and
benefits as a way of ensuring, through a mandatory policy, that
Canadians save more for retirement.
For the past six months,
officials at both levels of government were assigned to study both a
CPP enhancement and a private-sector option for people who do not have
workplace pensions. Mr. Flaherty said there is simply not enough
provincial support right now to move ahead with CPP reform.
“It's
a multi-jurisdictional challenge to get a consensus on CPP. It's clear
that we do have broad support for the private-sector solution,” he
told reporters on Parliament Hill Thursday.
Changing the CPP
requires the support of two-thirds of the provinces representing
two-thirds of the population. Even if that threshold could be met, it
would be politically and technically challenging to accomplish a major
CPP change over the objections of individual provinces.
Canadian Labour Congress president Ken Georgetti praised Mr. Flaherty in June for supporting CPP improvements. Now he’s furious.
“Voluntary
systems don’t work,” he said. “I guess a couple of lunches with the
insurance and the banking industry have more effect on this government
than Canadians’ public opinion. It’s just absolutely unacceptable in our
view.”
The PRPP would be administered by regulated
private-sector institutions, such as insurance companies, and Mr.
Flaherty suggested the rules may require companies that do not
currently offer a plan to offer the PRPP to their employees. In that
scenario, the employees may be automatically enrolled in the plan and
would have to specifically opt out should they not want to participate.
The
minister says the plan should appeal to small business owners who may
not have the expertise or resources to set up a workplace pension. The
PRPPs will pool contributions from many individual companies and
workers, allowing them to take advantage of the investment advantages
of large retirement funds.
Keith Ambachtsheer of the Rotman
International Centre for Pension Management has been following the
technical negotiations closely. He said Ottawa appears to be taking the
simplest option with the PRPP. “I think there’s considerable evidence
that something stronger than this is required to solve the problem,” he
said.
Keith Ambachtsheer and Ken Georgetti
are absolutely right. These Pooled Registered Pension Plans (PRPP) are a
joke -- a dead giveaway to the private sector. What's the problem? For
one, they're voluntary and second of all, they are not defined-benefit
plans, just another defined-contribution plan. This will leave many
vulnerable to the whims of the market.
But Sun Life calls PRPP a
"historic milestone". Of course it is, for their bottom line. The only
problem is if we compare the performance and fees of these PRPPs to that
of the Canada Pension Plan Investment Board, I'd rather have my pension
money managed by CPPIB. Not only are their fees lower, they can invest
in public and private assets all around the world and outperform most
private sector plans over the long-run.
In Ottawa, these concerns were raised by NDP leader Jack Layton who said the plan will only benefit investment bankers and give less to middle-class Canadians, because private-sector financial fees dwarf those for the public sector.
I'm
not going to get political here because pensions are far more important
to me than politics. I am however surprised that the Finance Minister
came out before meeting with his provincial counterparts. If I were
them, I'd be pissed off. Pensions are one of the most important
political and economic issues facing our country, and to bend over and
hand the private sector freebies is simply wrong. Mark my words: PRPPs
cannot compete with CPPIB, the Caisse, Ontario Teachers, OMERS, AIMCo,
bcIMC, and other large public pension plans. And they certainly can't
compete with HOOPP which is a private defined-benefit plan providing
pensions to Ontario's healthcare community.
Unfortunately, and
much to my disappointment, Ottawa is short-changing Canadians on
pensions. All those consultations just went out the window. It didn't
have to be this way, but I can guarantee you this isn't the end of it.
There's going to be a showdown in Kananaskis next week and we haven't
heard the last of expanding CPP -- not by a long shot!
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hi L E O ,
nice, can an a skis, lodge†
It's no wonder they are having this meeting deep in the rockies, an hour out of the city, in the middle of a Canadian winter, at the end of a road...
Why the hell doesn't Canada at least try allowing the New Democratic Party to form their national government, just once? Might as well, they've bothered to keep 'em around since the days of Tommy Douglas, a populist national icon. And judging by the high quality of some of their reps (MP Strathcona Linda Duncan comes to mind) I don't see why Canadians continuously refuse to give a majority government to a party that genuinely seeks to derive its policies from mandates from the masses, rather than campaign contributions from private interests.
It's not like they haven't given the Libervatives their chances. IMHO, those two parties are about as Canadian as ApplePie and the Star Spangled Banner, and are about as fundamentally different from each other as their Demoblican colleagues to their south.
Regards, eh
We have elected the NDP in provincial elections on multiple occasions and it has almost always created a major disaster for the province. My direct experience was in the 12 year reign of the NDP (Harcourt, Clark, Dosanj) years of the 1990's. It was an economically dark time for BC. Unfortunately the other option is the "Liberals" who are a proto fascist party that fully commits to socialized capitalism and corporate cronyism.
Kill all the politicians and we'll have a better world, imnsho.
There are often large differences, beyond the similairities in the rhetoric, when it comes to the NDP and the Provincial vs Federal parties. I am making a strong statistical argument that stands based soley on the fact Canadians keepin' 'em around so long, b'y. I doubt Canada would burst at the seams if Jack Layton had a majority. MP Linda Duncan is an excellent example of a decent, quality adding politician. Rare.
No, it's an entirely different group of people; it's as if you're saying Ron Paul as is the same as Dick Cheney because it appears they may both be Republicans...
"It's not like they haven't given the Libervatives their chances. IMHO, those two parties are about as Canadian as ApplePie and the Star Spangled Banner, and are about as fundamentally different from each other as their Demoblican colleagues to their south."
I concur. And besides the NDP, I would also like to see a libertarian party on the provincial and federal ballots. If it doesn't happen within the next couple of decades, I'll have no choice but to go into politics, thus making me a... a.... a politician! [barf!]
Is Leo looking for a contract or job with CPPIB perhaps? Good luck.
Just about to commend Leo for some useful observations when these straw men appeared , redefining sycophant.
These Pooled Registered Pension Plans (PRPP) are a joke -- a dead giveaway to the private sector. What's the problem? For one, they're voluntary and second of all, they are not defined-benefit plans, just another defined-contribution plan. This will leave many vulnerable to the whims of the market.
But Sun Life calls PRPP a "historic milestone". Of course it is, for their bottom line. The only problem is if we compare the performance and fees of these PRPPs to that of the Canada Pension Plan Investment Board, I'd rather have my pension money managed by CPPIB. Not only are their fees lower, they can invest in public and private assets all around the world and outperform most private sector plans over the long-run.
Written by a socialist who thinks big government bureaucracy is inherently more efficient and productive than the small private profit sector and the self-anointed who ran for office since grade school know better than anyone else what everyone should do?
(We're from the government and we're here to help you by reaching deep into your pockets and waistbands because you don't know how to take care of yourself - the absolut authoritarian paternalistic State.)
Just what the heck is so frightening about freedom, market fluctuations or voluntary contributions, and so appealing about alleged free-lunch, alleged free rides and broken promises, Leo?
(Government runs out of other people's money faster than they do.)
Union goons, thugs and their pet politicians repeatedly used scare tactics to kill any effective private reform of medicare and social security in the States to actuarially sound pension plans like Chile or any number based on private market investments that outperformed Social Security and CPPIB combined.
If Baby Boomers dollar cost-averaged indices, XOM or small caps, they outperformed most public and private pension managers on a total return basis, as Nobel Laureate client used to observe.
They certainly outperformed CPPIB.
http://www.cppib.ca/Results/
Do workers really need government stealing from their mandatory payroll tax funded plans to spend their money on the budget and replace it with non-marketable securities?
As far as the CPPIB or the Caisse, recent contacts with each regarding a private placement for them showed they did not invest in public and private assets all around the world or outperform most private sector plans over the long-run.
One did not return phone calls for three weeks and the other gave a wrong number and busy signal. Both gave excuses instead of discussion on an outstanding business opportunity. Good luck with that.
Leo might appreciate the private placement was one of the leading global solar utilities with grid parity and exclusive technologies and advantages, soon to go public...
I don't agree with privatizing a forced savings plan. That would be the same BS as the forced saving public plan. I have a problem with the government telling us on one hand we need to spend to save our economy and on the other blaming us for not saving enough so we need to be taxed more for our own good.
It's bullshit. My brother-in-law lives on a single income, has a home equity loan maxxed out, line of credit maxxed out, credit cards maxxed out and he goes out for dinner all the time, goes on holidays to Mexico, sporting events, concerts, golfing etc, etc... He has two kids and no savings. He sees debt as wealth. He is fucked in his own retirement.
My wife and I have no mortgage, savings in PM's, property and some stock and we save. We have not been on a trip for 15 years, though we may go on one this summer and are planning for retirement and TSHTF. Yet people like my brother-in-law want me to secure their retirements. Fuck that.
You're throwing the baby out with the anecdotal bathwater, I think.
If you want testimonials I'm sure I can find you a guy, not so smart, that prior to retirement worked hard every day of his life and PAID into the CPP the whole time... why should he now be prevented from accessing that wealth? IE You're not paying for him, he's already paid for himself. Also, if the CPP has been managed reasonably, why do Canadians have to fix what isn't yet broken?
Regards
PS
FWIW I'm not the serial junker.
Strawman, meet Ad hom...
Leo:
"But Sun Life calls PRPP a "historic milestone". Of course it is, for their bottom line. The only problem is if we compare the performance and fees of these PRPPs to that of the Canada Pension Plan Investment Board, I'd rather have my pension money managed by CPPIB. Not only are their fees lower, they can invest in public and private assets all around the world and outperform most private sector plans over the long-run."
ATG:
"Written by a socialist who thinks big government bureaucracy is inherently more efficient and productive than the small private profit sector and the self-anointed who ran for office since grade school know better than anyone else what everyone should do?"
'Fees are less in the public system' is the point
Regards
Really... why is it my problem if people are too dumb to save their money? I live a reletively frugal lifestyle while those around me spend like there is no tomorrow. Why the fuck should I have to subsidize their retirements. I don't often agree with Herr Harper, but on this one he has my support.
I love the fly by junk. No response. It must be from a shill who has no idea how to articulate a logical response. That and they are likely to be one of those who lives on credit and will have nothing saved of their own for retirement and need me to save them.
Well fly by junker, fuck you, you can't have my money.
"... you can't have my money."
Haha, yah Terminus would rather give it directly to the banksters and their politicians.
"I'm all right so fuck all the rest!" YEHAAAA!
(For now)
And how is it your money if someone else has paid into the CPP every paycheque all their working lives?
You know, it is interesting that you totally ignored my rationalization and you missed the part where I did not agree with a private forced contribution any more than I agree with a forced public one. You chose not to read it because it is logical and you have no argument against it. Instead you junk and try and position me as a right wing loony.
Rationalize my problem with the whole thing, I'd like to see you try.
Oh and, I pay taxes already, what I am against is a tax increase. I have paid in my whole working life, about 18 years now. So I have a vested interest in the CPP, I also have absolutly no illusions that any of it will be there when I am old enough to collect.
So the real story is... "I'm 25 years from retirement, so don't raise my CPP contribution"... so (maybe) we can get this key element of Canada's social safety net (you know... that cradle to grave, incentive killing, "communist" safety net) some where close to that bastion of free enterprise (and it would seem the model you would prefer)... the US of A.
Yes, even they offer more security (handouts right?) to retirees than Canada... but we wouldn't want you to have to shell out the $2 or $3 a week extra it would take to right this ship... "I'm alright Jack!"
btw, CPP is not a tax... it's a government run insurance policy... only the insurance companies don't get to skim off the top of it... maybe that's your problem.
I didn't even know Kansas had a ski area.
hehe. I once heard a lady from Louisiana try to drawl "Saskatchewan", it was hilarious too. And to my knowledge that one says just like it's spelt.
Try this one: "Waskatenau"
CPP: bleeding the young to keep the Boomers in the lifestyle to which they have become accustomed.
Call it what it is: another tax on Canadian income earners.
I logged in and this came up ...November U.S. auto sales expected to increase, Reuters reports"... the plan will only benefit investment bankers and give less to middle-class Canadians, because private-sector financial fees dwarf those for the public sector."
We need a plan that will benefit the savers.
As long as there is a middle man to take fees and bonuses the savers will lose.