New hope for a Canada pension fix

Posted on October 16, 2015 in Social Security Debates – Opinion/Editorials – As Justin Trudeau’s Liberals surge to the fore in the closing days of the federal election campaign, there’s hope for a much-needed fix of the Canada Pension Plan.
Oct 14 2015.   Editorial

Far too many Canadians face a wrenching lifestyle adjustment when they leave the workforce. The so-called “golden years” may prove to be anything but for the one worker in four who isn’t saving enough for retirement. And Ottawa hasn’t bestirred itself to address the problem, in any meaningful way, for the past decade.

Stephen Harper’s Conservative government has resisted every call to expand the highly regarded Canada Pension Plan to provide better coverage for the roughly 60 per cent of the labour force that doesn’t have the security of a workplace pension.

To this day, the Tories rail against “job-killing payroll taxes.” Worse, they have battled rancorously with Ontario’s Liberal government over plans to create a separate provincial pension to supplement the federal one.
But as the Liberals surge to the fore in the closing days of the federal election campaign, there’s hope for a much-needed fix.

As the Star’s Robert Benzie reports, Ontario Premier Kathleen Wynne is signalling — rightly—that she is prepared to work hand-in-glove with the federal Liberals to expand the CPP if they form a government after Monday’s vote.

Although Wynne had been planning to bring in an Ontario Retirement Pension Plan in 2017, she is prepared to put it on hold if CPP reform is back on the table after Oct. 19.

“If we have a partner in Justin Trudeau to sit down and work out what they’re looking at as an enhancement to CPP, that was always my starting point, that was the solution,” Wynne said on Tuesday. She’s right. An enhanced CPP ought to be the preferred option. And Wynne has an ally in New Democratic Leader Tom Mulcair as well. He, too, favours that approach.

This renewed prospect of CPP reform is more than welcome. The expertly managed CPP, with $265 billion in assets and a strong 18.3 per cent rate of return, is the gold standard. Employers and workers pay into it equally, to a combined maximum of just under $5,000 this year. The plan locks in contributions over the long haul, providing a safe, reliable retirement income. But the CPP covers earnings of up to only $53,600, and pays out just $12,780 at most. That’s not enough to provide a good retirement for most people.

As the Star has written before, the CPP should be expanded to double the benefits. That’s what the Ontario government, other provinces and trade unions have been lobbying the Harper Conservatives for, to no avail. It would provide a better floor for people who will be retiring in 20, 30 or 40 years’ time.

To her credit, Wynne was prepared to fill the vacuum left by Harper’s lack of leadership. Her plan would have almost doubled the pension for a $70,000-a-year income earner, to $22,750 a year.

But the Conservatives fought Wynne tooth and nail. They depicted her plan as a burden on Ontario employers and workers, dismissing its benefits. They refused to amend the law to let the plan be treated like the CPP for tax purposes. They refused to collect deductions on Ontario’s behalf. And they refused to provide information to help launch the plan. That obduracy may have cost the Tories dearly. A national poll earlier this year found 88 per cent support for CPP expansion.

Once the election dust settles, Canada’s political leaders should get behind a stronger CPP. It’s the best protection for workers in a world of ever-churning, ever more precarious jobs.

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