CPP: If Not Now, Then When?


The politicians are playing politics with our future and it has to stop. The Canada Pension Plan needs to be increased and everybody knows it but for some reason the politicians are not getting the message.

If you accept the fact that Canadians are not saving enough for their retirement and need a better vehicle with which to do so then the settled opinion is that increasing the CPP is the best way to do that. All the other options have been tried.

The aim here is to put enough money away so that once the paycheques stop, by choice or not, the invested savings have earned sufficient money to allow you to draw enough to live on and preferably to maintain your standard of living. Research shows that a sizeable number of Canadians will face a significant decline in their standard of living because they are not saving enough. But also because their investments are not making enough returns – especially now in the low interest rate environment.

Dollar for dollar, you can’t buy a retirement pension any more cheaply than purchasing additional units of the CPP, if you could, unless you’re lucky enough to belong to a defined benefit plan at your workplace. Two-thirds of working Canadians don’t have any workplace pension plan.

The CPP or any large defined benefit plan is able to generate enough investment income to pay your lifetime pension benefits. In fact, it is not your contributions that pay for these benefits but the investment income, which pays 80% of those benefits. If you haven’t yet you might also read CARP’s precis of these findings.

So why has a simple retirement investment option become so political?

Primarily because you can’t have it unless the politicians agree to amend the CPP. And that takes 2/3 of the provinces with 2/3 of the Canadian population plus the federal government.

It happens that there is now a consensus of enough of the provinces necessary to fulfill that formula but for some reason, the federal government has refused to consent and just won’t budge – despite the fact it was federal finance minister Flaherty who proudly made the commitment in June 2010 for a modest enhancement to the CPP.

In fact, Alberta is the only major province that refuses to join in the consensus but there are enough other provinces agreeing that Alberta’s vote is not needed. Minister Flaherty has been relying on Alberta’s refusal to provide him with political cover – so that he could argue that he needs unanimous consent even though the law does not require it.

Word is that his office was in a panic when Ontario premier Kathleen Wynne headed off to Alberta last week saying that she would encourage her Alberta counterpart to join in the consensus. Luckily for the federal government – but not lucky for Canadians hoping for a better retirement – Premier Redford toed the line and said no change to CPP was needed.

So here we are on the eve of yet another federal provincial finance ministers meeting where the result will depend on whether politics or common sense will prevail. ‎‎To help make politics align with common sense, it’s time to tell your federal and provincial politicians that they should act now to improve the CPP.

The provincial finance ministers met today and agreed that CPP enhancement must be part of any retirement system reform. The premiers are meeting in mid-November and the crucial meeting of federal-provincial [FTP] finance ministers will take place in mid-December.

Here’s the email list of finance ministers and premiers and the federal finance minister.

You can use CARP’s E-VOICE, write a letter or visit the constituency offices of your local elected representatives.

They need to hear from you directly – that you fully support and understand the need for the CPP enhancement and that you want them to act now to provide a better retirement future – not for you but for your children and grandchildren.

If not now, When?