PRPPs are a “weak-kneed” response to the retirement income problem, Duncan said. But Ontario has agreed to support the implementation of PRPPs, so long as there’s a “meaningful discussion” about enhancements to the Canada Pension Plan.
“The cost of administering Canada Pension Plan is three-quarters of 1 per cent, versus 2.5 to 3.5 per cent on privately administered plans,” he said. “So I think we are going to be turning up this discussion here in Ontario. We think it’s important.”
Premier Dalton McGuinty has said he’d like to work with other provinces as well as Ottawa to come up with a solution.
“(CPP is) a big plan, it’s a strong plan, it’s a very cost-effective plan. It’s run very efficiently,” McGuinty said Friday.
Enhancing CPP is the way to go, said Susan Eng of CARP, a nonprofit advocacy organization for people over the age of 50. But the province also needs well-paying jobs if younger workers are to save for their retirement.
“If you improve on people’s ability to save — and this applies to lower-income people even more than the average worker — then they are less likely to have to depend on OAS,” she said.
Ontario’s governing Liberals are also looking to make changes to pension plans in the broader public sector, some of which are facing “serious sustainability challenges,” according to the 2012 provincial budget tabled last Tuesday.
That’s a problem for the provincial government, whose pension obligations are projected to increase to levels that would “crowd out” spending for other programs, it said. Pension expenses are expected to rise from $2.4 billion this year to $3.4 billion in 2014-15.
The government is looking at having public sector workers pay more into their pensions, pool their plans or reduce benefits if there’s a deficit. But it plans to hold consultations before introducing legislation.
