Everyone has an opinion about how to solve Canada’s pension dilemma—from creating pooled registered pension plans (PRPPs) to expanding the Canada Pension Plan (CPP).
The latest duo to share their thoughts are Jim Leech, former CEO of the Ontario Teachers’ Pension plan and Jacquie McNish, senior writer with the The Globe and Mail.
They spoke at the Canadian Pension & Benefits Institute’s Pension Summit in Toronto on Thursday about their new book, The Third Rail.
“The genesis of the book came out of frustration about the level of debate that had been going on with regard to pensions,” said Leech.
The debate has become misinformed, added McNish. “It’s a debate over the haves and have nots, the 40% that do and 60% that don’t. Those who have a DB plan versus those who have a DC plan. That’s the wrong way to go,” she said.
“The point is that we’ve got 40% of Canadian workers about to retire and likely not prepared for retirement,” explained Leech. “In a volatile market environment and increasing longevity, that is the issue.”
In the book, Leech and McNish have tried to draw some lessons for Canada’s political, business and labour leaders, using three case studies. They also offer three recommendations for Canada’s pension system:
- a modest increase in the CPP for Canadians earning between $30,000 and $100,000;
- stop the demise of the DB plan but modify it to be more risk shared; and
- reconfigure the PRPP for those who don’t have a workplace plan.
Leech said that the current PRPP will work with an additional three developments: make it mandatory; lower the cost; and include a system in which Canadians are required to annuitize through the accumulation period, starting at about age 40.
The book is aimed at engaging and educating Canadians who are “bewildered about the whole topic,” said Leech, adding that’s it’s about 180 pages with big print, and there are no charts and graphs. “It’s perfect reading for a Toronto to Calgary flight.”
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