It is beyond disappointing to see federal Finance Minister Joe Oliver playing politics with Canadians’ retirement savings. His government’s purported interest in a voluntary expansion of the Canada Pension Plan (CPP) smacks of crass electioneering rather than being a genuine effort to improve Canadians’ retirement readiness.
While there have been no details accompanying Oliver’s pledge to consider a voluntary expansion of the CPP, there is little to indicate that it represents a serious attempt to address the problem of too many Canadians saving too little for retirement in an environment of weak investment returns and declining workplace pension coverage.
The timing of the announcement, in the months leading up to an election, suggests that the government wants to be seen as being interested in enhancing retirement preparedness. Yet, the fact that the Conservatives have roundly rejected any sort of expansion of the CPP in the past implies that the government’s interest likely is not sincere.
The one aspect of the proposition that is consistent with the current government’s policy approach is that the proposal imagines a voluntary CPP enlargement. However, research has shown consistently that retirement savings plans need to be mandatory to have the desired effect.
The plethora of private savings options that already exist are all voluntary, and all are underused. Despite the availability of several tax-subsidized savings vehicles, the evidence is that many Canadians aren’t saving enough for retirement.
At the same time, sky-high household debt levels seem to indicate that many Canadians are living well beyond their financial means. As the population ages and has limited ability to generate income, many households inevitably will face a significant drop in their living standards; which will, in turn, limit Canadians’ ability to contribute to economic growth.
As a financial services sector veteran, Oliver surely is well aware of the economic realities facing this country in the years ahead. If this election gambit works, hopefully the government will see it as a sure sign of the need for genuine pension reform.
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