In an effort to improve the system, eight out of ten provinces, including British Columbia, said they support the enhancement of the Canada Pension Plan (CPP). British Columbia’s New Democrats agree with this approach.
We believe the enhancement of the CPP is the best way for Canadians to save for retirement. Through modest and mandatory savings, it provides a defined benefit plan that would give you peace of mind about what you’ll receive when you retire. CPP also enjoys professional management and a proven record of reasonable investment returns and low administrative costs.
Pooled Registered Pension Plans, on the other hand, will turn your retirement savings over to the Canadian financial sector which charges some of the highest management fees in the world, according to research. Participation by employers in PRPPs is entirely voluntary and there is no requirement for employers to match employee contributions. Finally, the benefits they pay out are not guaranteed but are subject to the whims of the stock market.
The advantages of the CPP are so overwhelming that eight out of ten provinces agreed in principle, including the B.C. government. That’s why it was so disappointing to see the B.C. Liberals change their minds, jeopardizing the necessary consensus for enhancing the CPP and instead introduce legislation in B.C. last week that moves us in the direction of the less-desirable PRPP.
The Canadian Labour Congress had a detailed plan to double the CPP benefit – from about $934 per month to $1,868 – by gradually increasing the employee and employer contributions each from 4.95% of salary to 7.95%. The B.C. NDP endorsed this plan in principle.
Some private sector businesses don’t like it, however, claiming they can’t or won’t pay any more for their employee’s retirement.
As a result, the federal conservatives rejected this option preferred by a majority of provinces, and moved toward the Pooled Registered Pension Plans. Furthermore, they prevented these pooled plans from being managed by large public-sector and non-profit institutions like the BC Investment Management Corporation which manages the BC government’s finances and the pension funds of public sector workers. The Harper Conservatives would rather turn your savings over to Bay Street.
And without any clear indication of why the change of heart, the B.C. Liberals have flip-flopped and support the PRPP as well, introducing Bill 16, the Pooled Registered Pension Plans Act.
The B.C. Liberals are not up to the challenges that face B.C. today, and British Columbians deserve better. It’s time for a change to a new government with new priorities. B.C.’s New Democrats are offering change for the better, one practical step at a time.
New Democrat finance critic, and MLA for Surrey-Whalley