Expand CPP to Ease Canadians' Pension Problems, New Study Says
May 6, 2010, 1:41 PM EST
An expansion of the Canada Pension Plan is the most effective in addressing Canada's pension problems, says a new report by the Canadian Centre for Policy Alternatives (CCPA).
Pension expert Monica Townson, a CCPA Research Associate, looks at the options for expanding the CPP to ensure all Canadians have adequate retirement incomes.
"There is now widespread concern that unless changes are made, a significant number of workers will reach retirement age without sufficient income to support themselves," Townson says. Here are some findings from the report:
. the CPP is by far the most secure and cost-effective way to deliver a pension benefit for retired workers;
. 11 million employed Canadians have no workplace pension plan other than the CPP;
. RRSP schemes do not fill the gap at all;
. most Canadian workers have no RRSP because they can't afford it (last year, only 31% of eligible Canadians contributed to their RRSP, and unused RRSP "room" now exceeds $500 billion);
. RRSP payouts after retirement are inadequate and unreliable: current retirement-age RRSPs would provide monthly pensions of only $250, on average;
. many experts are now supporting expansion of the CPP to replace 50% or even 70% of pre-retirement earnings (compared to 25% today). They include David Denison, CEO of the CPP Investment Board, and Bernard Dussault, former Chief Actuary for the CPP;
. these options are financially possible, and would produce a fairer, less expensive, and more secure pension system.
To read the full report, please go to: www.policyalternatives.ca/publications/reports/options-pension-reform