I hear from constituents on a regular basis who are concerned about their retirement future. The reality is that twelve million Canadians lack a workplace pension plan. Only one in four Canadians can afford to purchase RRSPs each year. One quarter of a million seniors live in poverty in Canada. One in four workers is in a low wage job paying $13.32 an hour or less.
Basically, many people don’t have enough income left after their monthly expenses to save much, if anything, toward their retirement. This is a looming problem in Canada. With the real costs of basic living rising faster than Canada Pension Plan rates, it becomes a crisis.
The federal Conservative government’s approach to retirement security is to ask many families to face the crisis alone. This was illustrated in November when the government announced a Pooled Registered Pension Plan (PRPP), a type of group RRSP that employers may now offer. Instead of defined-benefit workplace pensions or meaningful changes to the Canada Pension Plan, the federal government has given you the choice to pump even more of your savings into risky private funds and stock markets.
To me, this plan seems to serve the banks and brokers, not the citizens. You’ve probably watched your or other people’s RRSP savings tumble in the past few years, with additional costs of fees paid to fund managers. (In 2007 alone, RRSP holders lost a whopping $25 billion to management fees.)
The Conservatives have also announced a recent change to the Canada Pension Plan (CPP) eligibility, “allowing” people to work longer and still contribute to CPP past the age of 65, while increasing the penalty for retiring before 65. This may be good news to some people – those who wish to continue to work and both draw on and contribute to CPP. But many Canadians work at jobs that are very demanding to their health. Maintaining full employment to the age of 65 is already a challenge for some.
Constituents are telling me they want less risk in their retirement planning and savings, not more.
In the mid-1960s the New Democrats helped launch the Canada Pension Plan. Public pension plans work. The large scale and professional management of the CPP helps keep costs down and accrues benefits for citizens.
Most provinces are also now calling for an expanded CPP with most provincial leaders agreeing: increasing the CPP benefits is the best, lowest-cost pension reform option available. Yet in December 2010, at a meeting of provincial finance ministers, Ottawa rejected this idea.