On Thursday October 3rd 2013, it was reported that PEI Finance Minister Wes Sheridan was publicizing his efforts to rally his colleagues around changes that would see the maximum CPP contribution rise to $4,681.20 a year from $2,356.20 starting in 2016, and the maximum annual benefit increased to $23,400 from $12,150. With the Throne Speech scheduled for October 16th, 2013 and on the heels of CARP’s Pre-Throne Speech member poll we are renewing our call to action on pension reform. The same day Minister Sheridan’s efforts were picked up by the national media we issued a press release making the case for CPP enhancement:
In an open letter sent to Finance Minister Flaherty, CARP is urging him to accept the increase to the CPP by proposed Prince Edward Island Finance Minister Wes Sheridan. The Government can make this commitment in the upcoming Throne Speech without further consultation since there has been thorough public discourse in the three years since the federal and provincial finance ministers first committed to a modest CPP enhancement in PEI in 2010. There is now sufficient agreement among the provinces to amend the CPP; all that is required is federal consent.
PEI Finance Minister Wes Sheridan released his proposal for a modest CPP enhancement which would increase benefits and extend coverage to more middle income Canadians. With Ontario and Quebec signaling their support, there is enough provincial support to permit an amendment to the CPP. The federal government must also agree so the Throne Speech would be a good opportunity to signal its commitment to enhancing the CPP – something it has so far not done.
“It has been three years since the finance ministers acknowledged that Canadians were not savings enough for retirement and that the existing vehicles were inadequate. Most important, they acknowledged that government had a role to play. Think tanks and pension experts have had enough time to line up behind CARP’s call to enhance the CPP. There is no reason to delay this any longer. The Throne Speech would be a good opportunity for the federal government to commit to making the change necessary to help Canadians secure their retirement savings,” said Susan Eng, VP Advocacy for CARP
In CARP Polls™, CARP members demonstrated their impatience with government inaction on pension reform to date. CARP is reiterating previous calls for enhancing the CPP as the best way to help people save adequately for their own retirement. As before, CARP members are ready to make action on CPP enhancement a condition of their vote.
CARP members polling shows strong support for modest enhancement to CPP:
- 6 in 10 members reject government’s excuse that a weak economy cannot withstand even modest employer contributions
- 75% say enough Canadians support CPP enhancement for the federal government to consent
- More than half [55%] of CARP members say that CPP enhancement is a condition of their vote; only a quarter [28%] would not set that condition, the rest are not sure
- CARP members are concerned about poverty among seniors and want a substantial, not just modest, CPP enhancement to address it and their concern that the economy suffers if there are more low income seniors
CPP Enhancement promised June 2010 – no action yet
In June 2010, the finance ministers finally acknowledged that Canadians were not saving enough for their own retirement and that governments had a role to play. They proffered the Pooled Registered Pension Plans and committed to considering a “modest” CPP enhancement. Since then, federal PRPP enabling legislation has been enacted and provincial legislation has been tabled and is in various stages of approval.
Despite repeated calls for action on CPP enhancement, with at least one province making CPP enhancement a pre-condition of its enacting provincial PRPP legislation, notably Ontario’s former finance minister, Dwight Duncan, and PEI Finance Minister, Wes Sheridan, no action has been taken to increase the CPP coverage or benefits, even “modestly”.
CARP has long called for a universal supplementary pension plan (UPP) that would be universally accessible and affordable, modeled on the CPP with employer contributions, payroll deductions, large pooled risk fund, professional management, and target/defined benefits. CARP polling shows that the majority of our members support CARP’s UPP. A CPP enhancement is the first important step to helping Canadians save more effectively for their own retirement.