Time to Expand the CPP

Labour Views – July 8, 2015
Written by Gayla Thunstrom, Acting President, Northern Territories Federation of Labour

Eleven million working Canadians — the vast majority of workers — have no workplace pension plan, or any prospect of having one.
And a majority of Canadians agree that Canada Pension Plan contributions should rise so that benefits can be increased. A new poll says over 75 per cent of Canadians — 80 per cent in the most recent Nanos poll — support enhancing the Canada Pension Plan.
In all regions, in all age groups, in all income brackets and among all party affiliations, Canadians want a better CPP. If there is one issue that has haunted the Conservative government through its mandate, it has been the CPP.
Time and again, the Harper government has twisted itself into knots in an effort to avoid what the vast majority of Canadians want: a better CPP.
In June 2010, then-finance minister Jim Flaherty indicated his support for an enlarged CPP, but was overruled by the prime minister. The government said economic conditions weren’t right to increase CPP benefit. Economists argued that economic conditions were actually more favourable then than they were when the Liberal government committed to revamping the CPP back in the mid-1990s.
The Tories claim that a gradual, phased-in expansion of CPP benefits would devastate the economy and destroy jobs. With typical deceitful language, they call CPP contributions a “tax”. Show me a tax that’s paid back in cash as a lifelong annuity.
So the federal government changed its tune, saying that it wasn’t enough that two-thirds of the provinces representing two-thirds of the population wanted to explore CPP expansion — there had to be consensus among all provinces.
When all provinces indicated they were open to continuing the discussion, the federal government ran out of excuses, and simply refused to discuss it further.
In the meantime, public backing for an improved CPP has only grown stronger. Support is higher now than it was in 2010 when the federal government committed to a modest expansion.
Meanwhile, offering people a growing alphabet soup of options to save on their own — PRPPs, TFSAs, now voluntary contributions to the CPP — has already proven ineffective at lifting the saving rate and ensuring secure, decent incomes in retirement.
Leading pension experts have warned the government repeatedly about the inability of voluntary fend-for-yourself “solutions” to avert the coming retirement crisis.
The Canada Pension Plan is the one part of our retirement income system that is working well.
Virtually all workers and self-employed save through the Canada Pension Plan. Employers can’t walk away from it — they have to participate.
No matter where you work, or how many times you change jobs, you’re always saving for retirement through the CPP. And it pays a real pension in retirement — a predictable, secure monthly benefit, protected against inflation.
It’s there for you right until the end, even if you live past 100. The plan is securely funded, and an independent actuary checks the books every three years.
The government doesn’t control the CPP fund, and can’t get its hands on it. The only problem with the CPP is that the benefit it pays is too low to live on with dignity in retirement.
That’s why Canadians want it expanded. Let’s have a real debate about the facts, instead of putting the issue on the backburner.