Real reforms to our public pensions have never been closer. But to finally take it over the top we are missing one key element – leadership.
Flying in the face of a growing consensus among the provinces and territories, boundless evidence from pension experts across the country, and overwhelming public support, the Conservative government now presents the most substantial obstacle to expanding the Canada Pension Plan.
For the sake of the over 11 million Canadians without a workplace pension plan, we need the federal government to show some leadership for all Canadians and make CPP expansion a reality.
Yet the Conservatives are persistent in pushing their pension myths. In doing so, they are making retirement an unlikely dream for millions of Canadians.
The Conservatives’ claim that increases to CPP contribution rates would cause Canadians to save less through private retirement savings plans is a fundamentally flawed argument. It is true, less than 25 percent of Canadians contribute to RSPs, mainly because they can’t afford to.
RSPs have proven to be an ineffective way to prepare for retirement. The many flaws of RSPs are repeated in the federal government’s tax-free savings accounts and private pooled savings plan. Experts across the country agree voluntary savings vehicles are a non-solution for the vast majority of Canadians without a workplace pension.
Delaying CPP expansion to keep propping up the failed experiments in voluntary private savings does nothing to solve the pension crisis. If the Conservatives are genuinely concerned with Canadian workers’ ability to contribute to individual private savings they would be advocating for increases to the real wages of workers – which have been stagnant for decades.
The Conservatives’ argument that the recovering economy cannot sustain CPP contribution increases is equally misplaced. There is not a shred of credible empirical evidence CPP contributions amount to a payroll tax and a job killer. CPP contributions, like all contributions to any pension plan, are deferred wages. It is disingenuous, if not an outright deception, to portray employers’ pension contribution a payroll tax.
Canada has some of the highest private investment fees in the developed world, on average five times those of the CPP costs. Canada’s CPP system is well run, fully portable and fully paid for by employees and employers. The CPP is funded sufficiently for the next 70 years.
We need to build on the success of the CPP. It is the most efficient, effective and affordable way for as many Canadians as possible to secure a decent retirement income.
This is why the Canadian labour movement is advocating for an expansion. By slowly increasing contribution rates by 2.85 per cent over seven years, Canadians could receive 50 per cent of their pre-retirement income in CPP benefits, rather than the current insufficient 25 per cent. At a very low cost to themselves and governments, Canadians could get meaningful pension reform.
After years of work by the labour movement and our allies, the provinces and territories are coming around to seeing the vast merits of improving CPP. Canadians see it too with almost 75 per cent supporting an expanded CPP.
In the lead up to the finance minsters’ meeting this week, opponents to CPP expansion have been relentless in their campaign against real public pension reform. They are more interested in driving down the retirement expectations of Canadians and protecting the exorbitant investment fees paid on private savings vehicles. When Canadians save for retirement, their contributions should go to their pensions, not to bolstering an investment firm profit margin.
The Conservatives have a choice: do they protect the interests of Canadians, or those of corporations, banks and financial institutions. So far they have stood firmly against Canadian workers. Their inability to move forward with possibly the most important public policy reform in a generation is an act of cowardice.
It is now time for the federal government to quit the delays, stop with the ill-conceived excuses, and show the leadership we need to expand the CPP. We can and must do better for the 11 million Canadians without a workplace pension and for generations to come.