Pooled registered pension plans not the answer to pension crisis: CCPA

Expanding CPP better alternative
|hrreporter.com|Last Updated: 12/08/2011

The newly proposed pooled registered pension plan (PRPP) program will not solve Canada’s pension crisis, according to a study by the Canadian Centre for Policy Alternatives (CCPA).

The study analyzes the PRPP program and argues that expanding the Canada Pension Plan (CPP) would provide better retirement pensions to Canadians.

“The PRPP scheme will not help the baby boom generation now coming up to retirement. They are the ‘lost generation’ when it comes to retirement income,” said Monica Townson, study author and CCPA research associate. “Pension reform should be addressing their needs in particular. We can almost certainly expect poverty rates among seniors to start going up again unless something is done.”

The PRPP program is a voluntary savings vehicle that does not guarantee a pension. “Since less than one-third of Canadians are entitled to contribute to registered retirement savings plans (RRSPs) actually do so, it is not clear why officials are claiming the proposed PRPPs will prove more attractive,” said CCPA.

Improving CPP benefits would address the two key issues in the pension system causing concern: the lack of coverage in workplace pension plans; and the fact that individuals are not saving for retirement on their own, found the study.

Among Canadians about to retire (those aged 55 to 64), the typical person with an RRSP has saved about $55,000. Roughly one-third of Canadians aged 45 to 64 are likely to end up with incomes that fall short of adequate minimum incomes or incomes that will allow them to maintain their standard of living when they retire, said CCPA.

An expanded CPP would provide better retirement pensions to virtually all Canadians, said CCPA. It covers virtually all Canadian workers, whether employed or self-employed, full-time or part-time; it is fully portable when workers change jobs; it is indexed for inflation; and it accommodates the different work patterns of women, it said.

“Canada does not need yet another voluntary tax-assisted retirement savings program. It needs public pensions that provide all Canadians with a basic guarantee of adequate income that will protect their standard of living in retirement,” said Towson. “Expanding the Canada Pension Plan would meet that objective.”

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