As expected, Prime Minister Stephen Harper’s government has just rolled out what the Conservatives are hailing as a “major milestone” to ensure retirement security for the nearly two-thirds of Canadians who do not have a company pension plan. It’s hard to see how they can make that claim with a straight face.
Pooled Registered Pension Plans (PRPPs), expected to come into force next year, will help some self-employed individuals and workers at smaller companies gain access to a private pension plan. But when Ottawa unveils the fine print it is expected that businesses will be required to offer a plan, but not to contribute to it. For workers, then, this may amount to little more than a larger professionally managed savings vehicle similar to a Registered Retirement Savings Plan (RRSP).
The need is undeniable. Many Canadians are not saving enough for retirement. Fewer and fewer have company-sponsored pensions and they do not use all their RRSP or tax-free savings options. Some simply don’t have the money to set aside. Others have underestimated their retirement needs and are not prudently planning for life after work. Unfortunately, another voluntary savings program won’t necessarily change any of that.
The pooled pension is unlikely to come close to filling the gaps in Canada’s retirement income system.
Indeed, those cheering the loudest when the legislation was introduced on Thursday were the banks and mutual fund companies who stand to make a fortune managing the plans.
Canadians who had their hard-earned savings decimated during the recession are now being invited to take on more risk by investing in the new plan. The New Democrats, our new official Opposition, have dismissed the Conservative plan as “retirement roulette.”
What workers need is a secure pension that will produce a decent retirement income. The best way to deliver that would be to expand the Canada Pension Plan, a highly-capitalized, well-administered plan that provides a safety net for millions of workers. Unions and other progressive voices have long argued for a phased-in doubling of CPP benefits, paid for by gradually increasing contributions by workers and employers. Most provinces, including Ontario, pressured Ottawa to consider this option last year.
That is still the best option on the table. Ontario’s Finance Minister Dwight Duncan was right when he described pooled registered pension plans as nothing more than a “modest savings vehicle that may or may not be taken up by individuals and companies.”
Canadians are still waiting for pension reform that will offer the real security and peace of mind workers and retirees need.
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Pooled Registered Pension Plans (PRPPs), expected to come into force next year, will help some self-employed individuals and workers at smaller companies gain access to a private pension plan. But when Ottawa unveils the fine print it is expected that businesses will be required to offer a plan, but not to contribute to it. For workers, then, this may amount to little more than a larger professionally managed savings vehicle similar to a Registered Retirement Savings Plan (RRSP).
The need is undeniable. Many Canadians are not saving enough for retirement. Fewer and fewer have company-sponsored pensions and they do not use all their RRSP or tax-free savings options. Some simply don’t have the money to set aside. Others have underestimated their retirement needs and are not prudently planning for life after work. Unfortunately, another voluntary savings program won’t necessarily change any of that.
The pooled pension is unlikely to come close to filling the gaps in Canada’s retirement income system.
Indeed, those cheering the loudest when the legislation was introduced on Thursday were the banks and mutual fund companies who stand to make a fortune managing the plans.
Canadians who had their hard-earned savings decimated during the recession are now being invited to take on more risk by investing in the new plan. The New Democrats, our new official Opposition, have dismissed the Conservative plan as “retirement roulette.”
What workers need is a secure pension that will produce a decent retirement income. The best way to deliver that would be to expand the Canada Pension Plan, a highly-capitalized, well-administered plan that provides a safety net for millions of workers. Unions and other progressive voices have long argued for a phased-in doubling of CPP benefits, paid for by gradually increasing contributions by workers and employers. Most provinces, including Ontario, pressured Ottawa to consider this option last year.
That is still the best option on the table. Ontario’s Finance Minister Dwight Duncan was right when he described pooled registered pension plans as nothing more than a “modest savings vehicle that may or may not be taken up by individuals and companies.”
Canadians are still waiting for pension reform that will offer the real security and peace of mind workers and retirees need.
Origin
Source:
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