FOR IMMEDIATE RELEASE
January 26, 2010
TORONTO, ON: CARP calls on the federal government to take due notice of statements made by BC Finance Minister Colin Hansen and in the Paper issued on behalf of the working committee of provincial Finance ministers supporting the need for urgent government action to establish a supplementary retirement savings vehicle. CARP repeats it call on the federal government to include pension reform in its Throne Speech on March 3, 2010.
In discussing the Paper released last week on behalf of the provincial-territorial Steering Committee of Ministers on Pension Coverage and Retirement Income Adequacy, Minister Hansen is quoted as saying: “The problem is one that’s looming. It’s going to become a problem and, in fact, I believe if we don’t act it will become a crisis” [Canadian Press: Voluntary top-up to CPP most likely to garner support in pension debate, BC says. January 26, 2010]
“The clear message from the provincial ministers is that the status quo is not an option – that urgent action is needed to protect the retirement security of Canadians. This stands in stark contrast to the federal government’s attempt to stall the debate. Despite its all-out effort to convince the provincial Finance Ministers at their Whitehorse meeting in December that Canada’s pension system did not need fixing, the provincial ministers apparently took better notice of the public discourse which has moved beyond whether there should be a supplementary savings vehicle to what shape it should take,” said Susan Eng, Vice President, Advocacy of CARP. While voicing a preference for a national plan that could make use of the CPP architecture, Minister Hansen repeated previous remarks by BC and Alberta governments that they would be prepared to go it alone with a regional plan. The two main options analysed in the Steering Committee’s Paper were an enhancement of the CPP – which would be mandatory – and a voluntary supplemental plan integrated with the CPP.
These options are consistent with but not identical to CARP’s proposed Universal Pension Plan – Click here to read the paper Minister Hansen is quoted as saying that a voluntary plan would be more workable because the private sector would push back against what they would see as an increase in payroll taxes.
“There are many ways to achieve the goal of a universally accessible, affordable saving vehicle that would provide an adequate pension and be robust enough to withstand the kind of turmoil we’ve seen recently. The more certain way is a mandatory approach but it is one that requires strong political leadership. The CPP is often given as the example of a well managed and sustainable fund but the critical feature is that mandatory contributions are used to pay current benefits. This will change as workforce demographics change but it was a major safety valve in the current market crash,” added Eng.
Throne Speech is Opportunity to Demonstrate Bold Leadership
Given that Parliament is prorogued, the Throne Speech will be the first parliamentary opportunity for the federal government to tell Canadians what it is prepared to do to fix Canada’s retirement system. And it would give some credence to the Parliamentary Motion passed unanimously in June 2009 to increase Old Age Security, Guaranteed Income Supplements and Canada Pension Plan benefits and give precedence to pension benefits in the event of a bankruptcy.