Canadians should have the choice to make additional, voluntary contributions to the Canada Pension Plan (CPP) in order to avoid facing a significant decline in living standards when they retire, said Gerry McCaughey, president and CEO of CIBC, in a keynote address at the National Summit on Pension Reform, which kicked off yesterday in Fredericton and ends today.

Read more

“Our research found that some 8.4 million people will experience a decline of more than 5% in their standard of living at retirement,” McCaughey told the audience of senior government and business leaders. “Far more troubling is the fact that 5.8 million Canadians are on pace to experience a significant decline—meaning a reduction in living standards of more than 20%.”

He noted that the most alarming finding was that most of that 5.8 million are young people. “In fact, our economists estimate that almost 60% of adults in their late 20s or early 30s can expect to experience a significant decline in their standard of living when they retire,” he said.

McCaughey advocated that the following five imperatives should be incorporated into any retirement savings solution:

  • it must be easy to understand and simple to participate in;
  • it needs to put the money of Canadians to work over the longest possible horizon—as much as 40 years or more—to maximize returns and grow savings;
  • it needs to be voluntary but committed savings so after an individual opts in annually, the money can’t be touched until retirement; these additional voluntary contributions should come from after tax income and when withdrawn at retirement would neither be taxable nor result in a loss of income tested benefits;
  • it needs to provide a predictable income stream at retirement—providing a date-certain, amount-certain return to Canadians at the conclusion of their working years; and
  • it needs to take advantage of the benefits of scale—and the incremental returns that are available from accessing high-quality investment management that operates within a low-cost structure due to its size and scope.

McCaughey said a CPP-like vehicle would deliver on all of these imperatives, as would allowing Canadians to make voluntary contributions to CPP.

“I believe that a reasonable starting point, benefiting the greatest number of individuals, would be to allow Canadians to increase their contributions to the CPP,” says McCaughey. “We need to provide Canadians with further choice—choice that gives them date certainty and real-dollar-amount certainty. A choice that will help Canadians as individuals, and Canada as a nation, reignite a culture of savings.”

Copyright © 2020 Transcontinental Media G.P. Originally published on

Join us on Twitter

See all comments Recent Comments


It should not be a “CPP-like vehicle” just make changes so that more can be contributed to the CPP by both employees and employers. Expansion of the CPP is the only thing that makes sense. It is much more cost effective than say PRPP’s, which are a joke and waste of time and just another way for the insurance sector to sepatate people from their money by charging ridiculously high fees and providing lousy investment performance.

Wednesday, February 20 at 11:09 am | Reply

Hugh B. Lynch:

I think McCaughey may be on the right track, but perhaps a two tiered vechicle whereby additional CPP vesting can occur but the residual funds would gravitate to the surviving spouse or sibliings. This may be too cumbersome to administer but would motivate people to participate especially those at the tail-end of their careers and who may be at risk of a sharp decline in living standard as mentioned.

Wednesday, February 20 at 12:40 pm | Reply

Priscilla Healy:

Gerry McCaughey has described the federal Liberal proposals on pension reform. This concept was introduced by Stephane Dion and developed in a White Paper that was released in the fall of 2010.

This concept is far superior to PRPPs or mandated increases in the CPP.

Wednesday, February 20 at 3:10 pm | Reply

JP Laporte:

So glad to see the CIBC’s CEO has endorse the idea of a voluntary Supplemental CPP first proposed in 2004 in the October issue of Benefits and Pension Monitor!

Wednesday, February 20 at 11:28 pm | Reply

Add a comment

Have your say on this topic! Comments that are thought to be disrespectful or offensive may be removed by our Benefits Canada admins. Thanks!

* These fields are required.
Field required
Field required
Field required