Over the past few months, you’ve had a few things to say about whether or not expanding the Canada Pension Plan (CPP) is a good idea. Here are just a few of the comments that we’ve received on stories about CPP expansion.

Neil Craig: While it may be inevitable, it is still not a great thing, plus why would I want to contribute more to a program where if I was saving outside of it I would produce a better benefit. There is still time to improve the system but it needs to start with taking action on financial literacy and getting the savings rates increased. Having future generations pay for our indiscretions and bad planning is a mistake. Any increase may also give false hope to Canadians that they only need to save in an enhanced CPP to ensure a comfortable retirement. We both know the demographic trend will not support this and we will be back to another “pension crisis” sooner rather than later.

Amin Purshottam: The CPP should be enhanced. The current maximum benefit is just over $12000 per year. The structure is already in place. Currently the Feds spend tens of billions in OAS payments alone. Most companies don’t have a pension plan. The PRPP is a joke as are DC plans. The mandatory contributions should be increased drastically and no capping contributions to the YMPE. Make the maximum earnings cap at $150K. Most (95%) of Canadians with RRSP’s and DC plans have no clue how to invest their money. The mutual fund industry charges very high fees and have a miniscule number of funds that actually beat their indexes over the long term.

Charles Spina: PRPPs were dead on arrival because their take-up depended on sponsor behaviours (at least the sponsors that account for more than a negiligible percentage of employees) that just weren’t going to happen. Sponsors are fatigued. They’ve been through a spate of messy wind-ups and conversions. They’re witnessed major asset erosion (the ability of their investment advisors and managers to protect them from it notwithstanding.) They see sponsored plans as no-wins. I think it not unreasonable to analogize PRPPs as the Tuckers of the financial services world. So…it’s over to the CPP. Not pretty, and admittedly expensive, but one of the salutary effects will be needed focus on the CPPIB’s portfolio construction methods and the valuations being given certain alternative asset holdings. Besides, the CPP levy is not a “payroll tax.” Bermuda has payroll taxes. We have CPP contributions. There’s a difference.

Craig Hewson: Do we really think that a government solution such as raising CPP contributions will solve this public policy issue? When will enough be enough?? There needs to be a much more coordinated approach that will remedy the issue in the short term – tax breaks to employers and greater incentives for individuals to save and focused sustained financial literacy in the long term for all Canadians.

B. Bucks: The maximum RRSP contribution limit for 2013 is $23,850 for 2013. Name me one average Canadian who can afford to save that amount cash in 2013? Want to raise that to say 50K a year? Name me one average Canadian who can afford 50K cash contribution a year? Simply ridiculous. On the other hand raise CPP employee contributions to say 10% of gross pay, on an hourly wage of $10/hour that’s merely $1 – more or less $40 a week. If you can afford half a small coffee at Timmies every day you can afford a CPP hike like this.

Robert in Vancouver: Raising CPP premiums is the same as raising taxes on both businesses and employees. This would be foolish to do while all major economies in the world as still so fragile. Canada’s economy is doing well but would suffer if there is a downturn in other major economies. So a new tax at this time would make our economy weaker and we would all suffer from that. A better solution would be to allow higher contributions into our personal TFSA and RRSP accounts, and offer tax incentives to companies who contribute to their employee’s TFSA and RRSP accounts.

Copyright © 2019 Transcontinental Media G.P. This article first appeared in Benefits Canada.

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Jim Cochrane:

If the purpose of CPP is to relieve “poverty in the elderly” why are we improving benefits for only the middle class not the working poor or homemakers. They who can not afford Tims or Starbucks once a week. Saying CPP premiums are immediately reinvested (in Canada?) they are not, then enhancing benefits which will have little or no impact for decades will not help (The public trust deficit). If CPP is reinvested immediately and creating jobs why are 62.7% of the funds invested last year outside Canada?

Saturday, February 08 at 3:16 pm | Reply

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