CPP Enhancement and PRPP Position

April 3, 2012 – CARP is encouraged by the Ontario government’s renewed commitment to CPP enhancement and investor protection on PRPPs (Pooled Registered Pension Plans).

In last week’s budget, the government affirmed that Ontario will continue to work collaboratively with other provinces and the federal government to ensure that PRPPs prioritize the interests of members and that implementation of pension innovation in the form of PRPPs should be tied to CPP enhancement as part of a comprehensive approach to pension reform.

The Ontario Government reiterated CARP’s concerns on PRPPs. In particular, PRPPs may simply replace one form of retirement arrangement, namely RRSPs, with another, instead of expanding retirement income savings and coverage. Likewise, it is unclear if the PRPP’s fiduciary framework adequately protects plan members and the extent to which PRPPs could achieve their low-cost objective is unclear.

CARP has consistently called for a supplementary Universal Pension Plan modeled on the CPP with mandatory enrolment, utilizing the existing payroll deduction mechanism, professional management, a governance role for the members, a mandate that is focused entirely on optimal performance and independence from government or any single employer. Defined benefits (DB) are also essential to achieving all of these goals.

In response, the federal and provincial governments ultimately acknowledged in June 2010 that there is a retirement savings gap and that government has a role to play in facilitating the creation of a supplementary pension savings instrument. At that time, the Finance Ministers also proposed to consider a “modest” enhancement to the CPP, an element that, despite repeated calls for progress, has been absent from apparent consideration until last week’s Ontario Budget.

As it stands, CPP enhancement is still far from becoming a reality, but Ontario’s renewed commitment to the cause is encouraging.

To read more about CPP enhancement in the Ontario Budget, click here

To read more about CARP’s position in PRPPs, click here