All Three Parties Have Put Forward Pension Reforms Proposals but what is Needed is a Comprehensive Reform Strategy

“People who already have pension plans will be encouraged by these changes especially if the provinces follow suit. But the devil is in the details: employers are not exactly lining up now to put more money into their pension plans so the increased surplus limit sounds good but may have no practical effect. Further, the changes may actually cancel each other out – even if employers increase the surplus to 25% in good times, they can draw it down to 5% through contribution holidays – so the actual working cushion would be no better than it is now,” said Susan Eng, Vice President, Advocacy of CARP in reaction to the recommendations.

There are also no proposals that would help pensioners whose employers are currently facing bankruptcy and unable to make up deficiencies, like the Nortel pensioners, nor to deal with the estimated $50 billion deficit in private pension funds nationally.

On December 8th the Federal Liberals also convened a press conference to announce their proposed reforms. To read CARP’s press release on this, click here.

To watch Susan Eng discussing this on BNN, click here.

The Liberals are proposing that a Supplement to the CPP be put in place. However, there is a major distinction between the existing CPP which is mandatory and the proposed Supplementary CPP which is to be voluntary. Creating a new voluntary plan could run into the same problems of inadequate uptake, as there is with unused RRSP room.

They have also proposed Bankruptcy and Insolvency Act Amendments for Self-Funded Long-Term Disability Plans which is a most welcome improvement but it is also an improvement that would leave other pensioners out in the cold. There is a much larger number of pensioners who face a major reduction in their pensions because their insolvent or bankrupt employer is unable to make deficiency payments.

Without accompanying proposed legislation, there is insufficient detail and no guarantee that any of these proposals will ever come into existence.

“It is time to stop this policy making by news release. CARP members and other older Canadians will be heartened that politicians at all levels of government have mentioned pension reform in some form because they realize the urgency of the current situation. But without details and a coordinated effort to comprehensively reform the current pension system, Canadians will be no closer to a secure retirement after the December 17th meeting of Finance Ministers in Whitehorse”, said Eng.

It is crucial that we look at every angle while reforming Canada’s pension system while the issue is in the spotlight and there is political will to do it. Please take a moment to help this cause by joining our callout to Finance Ministers to convene a Pension Summit at which retirees have a material role and by filling out our pension reform survey.

Keywords: pension reform