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The problem with big CPP

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thomas deuling:

I am a person that is just 62 years old. I was injured in a job site situation approximately 4 years ago. I have been fighting the WCB for a long time. To no avail, I have received nothing from them. I am happy they don’t move the retirement age upto 67 because I have been working for 45 years to wait longer to get something is absurd. I need it now. .

Tuesday, June 05 at 7:36 pm | Reply

Mike Murphy:

I think most people and provinces would be opened to the idea of wording in an improved CPP/QPP to allow for times when the promised payments can’t be met. As Fred says; to make the plan more flexible like a palm tree to weather financial storms. Increasing the age of retirement can wait. We already have enhancements to encourage people to continue working longer. As for PRPP’s, they just won’t fill the gap needed to give a decent retirement pension to most of Canada’s workers. We need improvements to CPP now.

Wednesday, June 06 at 7:14 am | Reply

cyberclark:

Ontario is very correct. The Conservatives will stop at nothing short of turning the whole CPP over to private companies!

To do this they must destabilize the account and cause dissent in the population. Then, they offer the cure, privatize it.They are quite up to this task.

Wednesday, June 06 at 10:47 am | Reply

Bruce Kennedy:

Mr. Vettese argues that we need to do to things: raise the CPP retirement age (primarily for labour force reasons), and make the CPP a target benefit plan with an explicit benefit adjustment arrangement.

The CPP did become a target benefit plan in 1997, and there is an explicit adjustment formula in effect. It’s called the automatic balancing mechanism (ABM).

The CPP also did move away from a fixed retirement age of 65 to implement retirement-age-neutral adjustments to retirements at any age from 60 to 70. The whole point of the retirement-age-neutral adjustment factors is to ensure that the CPP does not create incentives that would interfere with future desired labour force behaviours.

Both of Mr. Vettese’s problems have already been solved.

Wednesday, June 06 at 11:41 am | Reply

Fred Vettese:

The CPP does indeed have an automatic balancing mechanism – the trouble is, it’s not automatic. I’m quoting the chief actuary of the CPP in saying this. As for normal retirement age, it is clearly 65 under the CPP because that is the age assumed by the 25% formula. Of course, there is a range of retirement ages 60 – 70 but that is not the same as saying normal retirement is at 67; it’s not.

Wednesday, June 06 at 3:08 pm

Bruce Kennedy:

The automatic balancing mechanism is not automatic, but it is the default formula. It goes into effect unless the federal and provincial finance ministers agree on another adjustment.

Raising the normal retirement age from 65 to 67 would only shift the reference point from which the retirement age adjustments are applied. It would simply be a 14 percent cut in CPP retirement pensions. This would have little or no labour force participation effect. (That is already taken care of by the retirement age adjustments.) And it is not required financially because the CPP’s funding strategy is on track. It would only make sense if the funding had gone off track, and it were being brought in by ministers as an alternate adjustment to reduce benefits and put the funding back on track.

Wednesday, June 06 at 10:32 pm | Reply

Brad Underwood:

While we’re quoting the Chief Actuary here, he also says the CPP is sustainable at the current legislated contribution rate for the duration of the 75 year projection period. This will cover the baby boomers retiring and then some.

I don’t see any rationale for raising the CPP normal retirement age from 65 to 67, especially when the current retirement zone for CPP provides individuals with an actuarially neutral choice to retire anywhere between 60 and 70.

Not to mention new measures like the Working Benefit and the associated elimination of the work cessation test. In small incremental steps the CPP has provided flexibility for individuals to maintain labour force attachment, but it should be their choice as everyone’s circumstances are different!

Friday, June 08 at 12:46 pm | Reply

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