Regulators should consider voluntary pension plan: Study

Professor says CPP adequate for low income earners but middle class needs another option

Governments should consider a voluntary pension plan as a way to stave off the looming shortfall of retirement income for lower-middle and middle class Canadians, according to a new study from the University of Calgary.

Should Government Facilitate Voluntary Pension Plans examines the benefits of creating a regulated voluntary pension plan (VPP) that would allow earners and employers to contribute to a large, co-mingled investment pool. The VPP would face the same regulation as employer-sponsored registered pension plans but would bring the benefits of being able to invest in a wider variety of instruments to a wider audience, thereby mitigating risk.

"The current pension system in Canada, while protecting many employees, is sufficiently complex that it serves as a barrier to middle-class individuals, especially this who work for small- and medium-size employers," Norma Nielson, a professor in the University of Calgary's Haskayne School of Business and author of the study.

"The VPP could be a solution that allows professional investment services to be more readily accessible to solve what is solidly a middle-class Canadian problem."

The Canada Pension Plan and other programs provide adequate retirement income for low income earners, and that high income earners use the opportunities they are afforded under the current system to save and invest adequately for retirement, said Nielsen.

However, those in the middle do not have sufficient disposable income to adequately save enough to provide a middle class retirement and a VPP could help them do just that, she said.

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