For example, companies with underfunded plans on the verge of insolvency could be given the option to transfer pension assets to individual accounts within the supplemental plan, subject to employee and regulatory approvals.
Such transfers would enable otherwise healthy companies to preserve cash flow for operations and salaries, and thus maintain employment, while ensuring that the pension monies growing within the supplemental CPP continue to be professionally invested at the lowest possible unit cost.
Conceivably, companies such as GM, Chrysler, Air Canada or Nortel might thrive under this model. This solution would not require government tax-assisted bailouts.
Canadians need to know that their hard-earned money is invested professionally and prudently for a rainy day. The CPP model can be expanded to allow for this in an extremely cost-effective manner that is respectful of the private sector.
Back in 1966, Canadians saw fit to create the CPP. It was voluntarily stunted in its scope to give the private sector a chance to fill in the gap. Four decades later, only approximately 25 per cent of taxpayers in the private sector benefit from a registered pension plan.
Perhaps it is time we debated the merits of a supplemental CPP solution to provide immediate relief to floundering companies and long-term prosperity for our children.
Jean-Pierre Laporte is a lawyer practising exclusively in the area of pensions and benefits at a Toronto-based international law firm. He is also a director of CHIP Charitable Services.
