Statement by Paul Moist in response to the Fraser Institutes’ recent report on the expansion of the Canada Pension Plan:
Encouraging Canadians to rely heavily on voluntary savings schemes for their retirement incomes is a fools’ errand that will only deepen this country’s pension crisis. Yet the Conservatives, banks and other financial institutions, and right-wing think tanks keep promoting RRSPs and other individual savings vehicles over the far more effective, efficient and affordable way of helping the over 11 million Canadians without a work place pension – expanding the Canada Pension Plan.
The latest CPP roadblock comes from the Fraser Institute. The right-wing think tank claims expanding the CPP would lead to Canadians contributing less to RRSPs.
The simple response to their less then vigorous analysis is – so what?
While individual savings are an integral part of Canada’s pension system, relying heavily on RRSPs for retirement income is a risky strategy. RRSPs are insecure, subject to high management fees, and are often funded without any contributions from employers. These factors leave retirement savings at risk of being wiped out by financial market instability, and pose the very real threat of people out living their savings.
And the statistics clearly show Canadians aren’t contributing to RRSPs. In 2013, only 23 per cent of people filing taxes reported any contributions. Canadians have almost $900 billion dollars in unused room to contribute. After decades of stagnant wages, most Canadians are just trying to make ends meet.
So why should we prop up the obviously flawed RRSP by forsaking a much better and fairer solution?
By expanding CPP benefits with modest, affordable phased-in increases to the contributions made by workers and employers, we can ensure millions of Canadians have a secure, reliable pension, indexed for inflation for their entire retirements.
This is the best plan. And as repeated polls showing overwhelming public support for CPP expansion, Canadians already know it.