Experts React to CARP Pension Reform Survey Results

January 13th 2010,

If you have been receiving our semi-monthly e-newsletters, CARP ActionOnline , you will know that we include a survey and the latest just before the Whitehorse meeting of the Ministers of Finance on December 17th and 18th, was on pension reform. This is what the experts had to say about our poll results:

To view survey results, click here

“The overall implicit message from the survey respondents is that the status quo is not a reasonable option. This message is even more important if we take into consideration the large proportion of GIS recipients (35% of Canadian seniors), most of them not likely have responded to the survey. Their retirement security is much more affected than that of respondents who did answer the survey. The prime issue underlying the need for a pension reform is the level of seniors’ poverty, which the private sector will never address on its own. Poverty can only be addressed through mandatory government programs. A CPP expansion would be a great measure to this effect, as it would ensure that workers take personal responsibility for their retirement security rather than leaving that responsibility to their children and grand-children.”

– Bernard Dussault, Former Chief Actuary and Senior Research and Communications Officer for the Federal Superannuates National Association.

“To me the survey highlights two key goals for pension reform – improve the adequacy of retirement income and ensure that whatever retirement income is promised is secure. While most respondents are financially prepared for retirement, there remains a significant minority who are not. These people need help. Solutions include expanding the CPP, purchasing a CPP supplement, expanding the OAS or allowing retroactive TFSA savings. Others people are willing to save more on their own . But, they do not trust private enterprise to do the job and look to government to offer both the facilities and the security for savings. They want a safe affordable retirement option without the high fees and self-serving, questionable advice. I think that this is an important message, not only to government, but also to all those who want to offer pension or savings opportunities. Although the respondents primarily support the Conservative Party, their message is clear – do not stay the course.”

– Jim Murta, Fellow of the Society of Actuaries; Fellow of the Canadian Institute of Actuaries; Former President of the Canadian Institute of Actuaries

“Ownership of pension surplus is contentious issue. Workers tend to think that the surplus should belong to them, as indicated by some 18% of respondents who said it should belong to pensioners.

Employers say that this position makes it undesirable for them to allow for a contingency surplus to accumulate. Insisting that a surplus belongs to the plan member and pensioner works against the overall interest of the very principle of retirement security, especially in plans where the sponsor is the sole contributor. In any event, the wording of the pension plan should always clearly indicate how a surplus is to be treated.”