FREDERICTON - The national president of the Canadian Union of Public Employees says Canada Pension Plan benefits should be doubled in an effort to help Canadians who don't have a workplace pension plan.
Paul Moist said the CPP needs to be improved.
"Sixty-five per cent of the workforce has no pension plan and CPP expansion is the most viable alternative," Moist said in an interview.
Moist, who is attending a pension summit in Fredericton, said the CPP is a good plan but it only replaces 25 per cent of a worker's income, so contributions should be increased.
Moist said the pension plan should be treated the same as health care.
"We should all have to pay — no choice. Employers should have to contribute and we prepare ourselves for retirement where we're not a burden on one another."
Under the plan proposed by Moist, CPP contributions would increase by 0.43 per cent of pensionable earnings each year for seven years.
But Ted Menzies, the federal minister of state for finance, said increasing CPP contributions would require the support of a majority of the provinces and that's not the case right now.
"Just recently we reviewed it with those finance ministers and it's in good shape, but there was no consensus among those provinces, territories and the federal government to make any changes as an expansion of the Canada Pension Plan," said Menzies.
He said the government must be careful not to do anything that could hurt the integrity of the pension plan.
Menzies said increasing CPP contributions would be particularly hard on self-employed individuals who pay both the employer and employee contribution. He is encouraging the provinces to move ahead with legislation that allows for registered pooled pension plans.
That's a voluntary system that allows workers to contribute but doesn't require employers to chip in.
The federal government has passed legislation for the registered pooled pension plan concept.
Moist said the federal plan would be a failure from the start.
"The so-called pooled retirement pension plan is not compulsory for employers, they don't have to put a nickel in, and employees can opt out," Moist said. "It can't work and it won't work."
Note to readers: This is a corrected story. A previous version said CUPE's president was calling for contributions to the Canada Pension Plan to be doubled.
OAS vs CPP
Here is a look at OAS and the CPP and how they differ. (Getty) <em>With files from CBC</em>
What is OAS?
The Old Age Security pension is a monthly payment available to Canadians aged 65 and older who apply and meet certain requirements. Unlike CPP, it is not dependent on a person's employment history and a person does not need to be retired from a job to qualify. The government adjusts the OAS payment every three months to account for increases in the cost of living according to the Consumer Price Index. The average monthly amount was $508.35 in the last quarter of 2011. The maximum payout for the first quarter of 2012 is $540.12. There are also supplementary programs, including the Guaranteed Income Supplement, which provide additional income to low-income seniors. The government claws back OAS payments from high-income Canadians. In 2011, for example, if you were retired but had an income of more than $67,668 (from things like pensions and personal investments), the government would reclaim part of your OAS payment - 15 cents for every dollar of income that you had above the $67,668 threshold. That means that if you were retired with an annual income of around $110,000 or more in 2011, your OAS payout would be reduced to zero. (alamy)
Who Is Eligible?
OAS is available to Canadian citizens and legal residents living in the country who have spent at least 10 years in Canada after they turned 18. It is also open to people outside of the country who were Canadian citizens or legal residents on the day they left the country, as long as they spent at least 20 years of their adult life in Canada. (Getty)
When Should You Apply?
A person should apply for OAS six months before they turn 65. If you have not lived in Canada continuously or were not born in Canada, the government requires a statement containing all the dates when you entered and left the country. It may also ask for supporting documentation. If a person applies after age 65, they can receive up to 11 months in retroactive payments along with a payout for the month in which a person applies to receive OAS. So if a person applied after their 66th birthday, they would receive 12 months of OAS payments. (<a href="http://www.flickr.com/photos/elwillo/" target="_hplink">Flickr:Keith Williamson</a>)
How Is The Rate Calculated?
In order to qualify for a full pension, a person must have lived in Canada for at least 40 years after turning 18. People also qualify if they reached the age of 25 on or before July 1, 1977, and either lived in Canada, had some residency in the country after age 18, or held a valid Canadian immigration visa and spent the 10 years immediately before appying in Canada. For those who do not qualify for a full pension, a partial amount is paid out based on the number of years spent living in Canada. For instance, if a person has spent 36 years of their adult life in the country, they will earn 36/40th of the full OAS amount. Based on the eligibilty requirements, the minimum payout is one-quarter of the total, to account for a total of 10 years spent in Canada. Once a partial pension has been approved, the percentage of the total OAS pension received will never increase even if a person spends more years in Canada. (Matt Cardy/Getty Images)
What Is CPP?
The Canada Pension Plan is a form of retirement income that is open to all Canadians who have worked and paid into the system through deductions from their paycheques. The amount a person receives under the system depends on how much and for how long a person contributed, along with the age at which a person started receiving CPP payments. There are three types of CPP benefits: disability benefits, retirement pension and survivor benefits. For the purposes of clarity, this article focuses on retirement pension form of CPP. The average monthly CPP benefit in 2011 was $512.64. The maximum payment in 2012 is $987.67. The government adjusts the CPP rate every January to account for changes in cost of living as measured by the Consumer Price Index. According to Service Canada, "If you have lived and worked in Canada most years between age 18 and 65 and earned about the average Canadian wage ($39,100 in 2002), at age 65 you would receive a CPP retirement pension of about $788 a month." (Getty)
Who Is Eligible?
Anyone who has made a payment to CPP is eligible for full retirement pension benefits once they reach the age of 65. A person can begin receiving CPP anytime after age 60 if they stop working or reduce their income, although they incur a financial penalty by doing so. In 2012, a person receiving CPP early will be subject to a 0.52 per cent reduction for each month before the age of 65 that they received payments. That number is slated to rise to 0.6 per cent each month in 2016. On the other hand, if a person chooses to delay CPP payments they receive a similar increase for each month they wait between the age of 65 and 70. In 2012, that increase works out to 0.64 per cent per month and will rise to 0.7 per cent next year. (alamy)
When Should You Apply?
This is really up to the individual and whether they want to receive a smaller or larger CPP benefit. However, the government recommends applying six months before a person wants their pension to begin. Canadians can apply online or print out an application and deliver it to a Service Canada location. Similar to OAS, a person can receive retroactive payments covering up to 12 months if they delay applying for CPP until after their 71st birthday. (alamy)
How Much Do I Contribute To CPP?
A person contributes 4.95 per cent of of their total pensionable income -- set at a maximum of $50,100 in 2012 -- to a total of $2,306.70 in contributions per year. Their employer contributes an equivalent amount. Self-employed people, on the other hand, must contribute both portions. Anyone earning less than $3,500 is automatically exempt from CPP contributions. At age 70, a person stops contributing to CPP even if they continue working. (alamy)