Act Now on CPP: CARP Open Letter to Finance Ministers, CARP Poll






November 14, 2013

Toronto, ON: As Canada’s Finance Minsters get set to meet in mid December, CARP released an open letter calling on them to act now to increase the CPP and use this opportunity to improve Canadians’ retirement security for a generation. CARP also released the results of its recent member poll backing this demand – calling CPP enhancement a ballot box issue. As further evidence of the broad support among CARP members, CARP Chapters in every province have written to their finance ministers and the federal government calling for immediate action on enhancing the CPP. [Open Letter included below]

The federal, territorial and provincial [FTP] finance ministers acknowledged after their meeting in June 2010 that Canadians were not saving enough and that government had a role to play by proposing a two-part plan – a voluntary, private sector-run pooled defined contribution plan and a modest enhancement to the Canada Pension Plan.

Legislation for Pooled Registered Pension Plans is being put in place but little progress has been evident on enhancing the CPP besides the promise to continue discussing the options. The next opportunity for the FTP finance ministers to take action is their mid-December 2013 meeting. It has been three years since the finance ministers agreed that Canadians needed help to save for their own retirement and proposed a modest CPP enhancement. Even if they agree to make the change this December, it will take another three years before coming into effect.

“CARP members will be watching to see if Canada’s Finance Ministers will finally move on modestly increasing the CPP, widely seen, especially by CARP members, to be the most effective way to help people save for their retirement. Voluntary options have been tried and failed.

“CARP members reject the idea that the economy is too weak to sustain increased CPP premiums especially since recent economic statements paint a rosy picture. They heard the argument the last time rates were increased and the economy improved. Rather, they realize that government can make a choice- put more pressure on the economy with more tax cuts or an affordable universal pension plan that people use to save for themselves and saves government money later.

“CARP members know that their pension benefits are taxed, spent in the economy and reduce any OAS or GIS payments they might otherwise get.

CARP members want to secure the retirement future for their children and grandchildren and it is a ballot issue for them– this is the chance to improve Canada’s retirement security for a generation.

And to demonstrate our support across the country, CARP Chapters in every province have written to their finance ministers and the federal government calling for immediate action on enhancing the CPP”, said Susan Eng, VP, Advocacy for CARP.

The provincial and territorial finance ministers took a fresh step recently coming to a consensus that any further discussion to help improve the retirement income system must include options for CPP enhancement.

Their respective premiers are set to meet this Friday with Ontario’s Kathleen Wynne leading the charge saying that an economic crisis looms if there is no action on CPP.

Federal Finance Minister Jim Flaherty agreed that expanding the CPP would be a good idea over the long run but not now saying that economic growth is still too weak to permit what he called “payroll taxes”. However, his Economic Statement this week predicts a $3.7 Billion surplus in 2015–16 so that the government may be on track to provide the promised tax cuts and income splitting.

CARP members polled in the latest CARP Poll™ reject this justification for delaying CPP enhancement and call for immediate action. They speak from personal experience – nearly all (91%) are receiving some CPP, almost half of them (45%) rely on CPP for more than 25% of their income.


  • Two thirds say the 25% target of pre-retirement income embodied in CPP is too little (66%)
  • Three quarters say the average Canadian cannot save enough for retirement (74%) and that enhancing CPP will help Canadians plan and save for retirement (75%)
  • Two thirds disagree with the Finance Minister’s opinion that the economy is too weak to permit CPP enhancement (63%) and many (39%) think resistance is due to ideological bias
  • Two thirds will be frustrated if CPP enhancement doesn’t proceed (69%) and most of them say they would deny the government their vote over CPP inaction (60%)

According to a recent study, contributions to CPP and defined benefit plans are invested in the economy, provide jobs and pension benefits are taxed, spent and reduce OAS and GIS payouts.


CARP is a national, non-partisan, non-profit organization committed to advocating for a New Vision of Aging for Canada, social change that will bring financial security, equitable access to health care and freedom from discrimination. CARP seeks to ensure that the marketplace serves the needs and expectations of our generation and provides value-added benefits, products and services to our members. Through our network of chapters across Canada, CARP is dedicated to building a sense of community and shared values among our members in support of CARP’s mission.


For further information, please contact:

Sarah Park   416.607.2471
Media Relations, Policy Researcher and Coordinator
[email protected]

Michael Nicin   416.607.2479
Director of Policy
[email protected]

Siobhan MacLean 416.607.2475
Media and Communications Coordinator
[email protected]






November 14, 2013


Dear Ministers of Finance:

There is now an opportunity to improve retirement security for a generation.

CARP welcomed your acknowledgement in 2010 that Canadians were not saving enough for their retirement and your two part solution – a voluntary, private sector run pooled defined contribution plan and a modest enhancement to the Canada Pension Plan.

Legislation for Pooled Registered Pension Plans is being put in place but little progress has been evident on enhancing the CPP. The reasons for further delay are difficult to understand.

The arguments for promoting PRPPs apply equally to a modest CPP enhancement, namely the need to help Canadians save more for retirement, have access to professional management, pooled risks and lower fees while avoiding employer liability for deficiencies and administrative costs. The CPP has the added virtues of mandatory enrolment and employer contributions, existing economies of scale, a payroll deduction mechanism already in place and most important, a certain lifetime pension benefit.

The more Canadians save and earn on their investments, the more secure their retirement and the less they will rely on government outlays for income support. Pension experts, bank executives and think tanks agree, along with CARP members, that a CPP-like model is the most effective instrument for achieving that goal. The choice of whether to act now to enhance the CPP, or create a parallel plan, is entirely in your hands.

Recent media reports cite poor economic growth as the reason some of you give for further delay on CPP enhancement but you continue to promote PRPPs. Presumably, PRPPs will not have the same drag on the economy either because employers are not required to contribute or they will not be as widely adopted. That would mean that all the effort expended to bring about the PRPPs will do little to address the broad based need for a better retirement savings vehicle.

A better way to look at the economic impact of increased pensions contributions is that the contributions are immediately reinvested in the economy by the pension funds. Those that oppose increased CPP contributions by employers are asking them to be exempt from contributing to the economic investment from which they stand to benefit.

To help Canadians save better for their retirement, it is important to act now on the second part of your 2010 proposal for a modest CPP enhancement. Any such decision requires a three year delay to implement by which time, according to your various economic statements, there will be a better economic outlook.

With any pension reform, the longer view is needed. It cannot help current retirees; it will only bear fruit in generations to come but the savings must start now. And not only will individual Canadians have a more secure retirement, but the economy and government finances stand to gain as well.

Canada’s pension system has well served its goal of preventing poverty in old age over the past decades, bringing poverty levels down from double digits primarily due to public pensions and the CPP but the beneficial effect plateaus with the CPP’s maturation. CPP and other defined benefit pensions have precluded billions in annual public pension payments for Old Age Security and Guaranteed Income Supplement. And just as pensions serve to smooth individual income over one’s lifetime, pension contributions made today will be invested in the economy immediately and the benefits will be expended in the economy in the future.

CARP members across the country have consistently voiced their support for increasing the CPP. It is clear from our polling that they are fully aware of its advantages compared to the alternatives and have drawn from their own experience in retirement or facing retirement to offer their opinions. Their rejection of claims that the modest amounts of additional CPP premiums will be “job killers” is backed up by historical evidence. Most of all, they recognize the importance of acting now to secure the future of their children and grandchildren.

We encourage you to use your upcoming FTP meeting to come to a clear decision about how and when the CPP will be enhanced. We look forward to being able to share the news with our members following your meeting that you have taken a major step forward in securing Canada’s retirement future.


Thank you.


Susan Eng, VP, Advocacy

Copy to: CARP Chapters