A new report says there are steps the government can take to ensure Canadians have enough money in their retirement — and they don't have to be sweeping measures to make a difference.
The paper by the University of Calgary's School of Public Policy released Tuesday says Canadians have had a tougher time saving for old age since the 2008-2009 economic crisis, especially those with modest incomes.
"Our view is that the Canadian Retirement Income System is not in crisis, but can be improved," authors Jack Mintz and Thomas Wilson wrote.
"Forcing increased savings for retirement for a large group of Canadians may well make many of them worse off. As in medicine, we believe the first mandate of pension reform should be ‘do no harm."'
The authors suggest that the Canadian Pension Plan be expanded to enable 35% of a worker's income to be replaced in retirement, up from the current 25% level.
That would mean an additional contribution of about 2.5%, shared between employer and employee, or by just the employee.
Mintz, a tax policy expert, said anything much larger could "do more harm than good" — especially for young Canadians looking to buy a home or start a family.
"A very significant increase in payroll taxes could hurt them a lot in that sense," Mintz said.
"What we recommend is really more of a modest expansion to CPP."
The paper says the eligibility age for CPP benefits could be increased to 67 to minimize a payroll tax increase and contributions should be tax-deductible the way those into Registered Retirement Savings Plans are.
The paper also recommends the Guaranteed Income Supplement be reformed to protect low-income seniors when the Old Age Security age of eligibility is raised to 67. That would ensure people between the ages of 65 and 67 aren't plunged into poverty.
And the report says the age limit for contributions into Registered Pension Plans and Registered Retirement Savings Plans should be hiked to 75 from 71 to reflect an increase in life expectancies. It also recommends the cap for contributions into Tax Free Savings Accounts be raised.