It's official: Working Canadians don't want their governments to increase the premiums we all pay into the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP). Most of us were already well aware that small business owners and other employers who are required to pay 50 per cent of the cost of CPP were opposed, but many suggested the average Canadian was onside. If you listened to some provincial finance ministers, you'd be led to believe the entire country was excited to hike CPP. It turns out, they were wrong.
This week, CFIB released the results of a public opinion poll conducted for us by Angus Reid Global, and the numbers are truly remarkable. When asked to select the best ways that government could help Canadians save for retirement, only 18 per cent of respondents to the poll selected mandatory CPP and QPP increases. Other options gained much broader support, including tax cuts (54 per cent), incentives (47 per cent) and improved voluntary savings options (35 per cent).
In fact, even those who we would expect to be supportive of CPP hikes are not so sure. In a recent poll conducted by the Canadian Association of Retired Persons (CARP), an organization that has actively pushed to expand CPP, just over 50 per cent of respondents were in favour of an increase. Interestingly, their poll closely mirrored ours on the question of whether Canadians could afford to save more for retirement. In both cases, 65 per cent said they could not.
So this weekend, federal and provincial finance ministers will come together at Meech Lake, to discuss a variety of ways that they might implement an increase that few Canadians can afford, and even fewer seem to want .
When the topic has come up in the past, and it has on several occasions, our leaders have usually backed away at the last minute. They usually punt the ball to their officials and declare that "it's not the right time." While this is a good outcome in the short term, it leaves the impression that mandatory increases to the CPP are generally a good idea, well worth doing at the right time. This is just not true.
While Canadians -- including small business owners -- support the CPP as it is, there are lots of good reasons why expanding it would be a bad idea, regardless of the timing. For example, while CPP appears to be well managed at the moment, it has been an unmitigated disaster in the past. We had to double premiums over a decade ago -- not to increase benefits -- just to keep the plan afloat. In fact, Quebec is currently in a plan to hike premiums for many years, again, with no increase in benefits whatsoever.
Also, if you save money in an RRSP or TFSA, the funds are yours and can be passed on to your family after your death. Other than a thin survivor benefit for spouses, your contributions to CPP vanish when you do.
Last year, the federal government enacted legislation to create a very different kind of pension option, Pooled Registered Pension Plans (PRPPs), a voluntary solution that would improve access to pension savings for many Canadians, particularly those working in small businesses. The same provincial leaders that are meeting to discuss CPP hikes have it within their power to enable PRPPs with provincial legislation.
The Federal Liberals have proposed to allow Canadians to bump up their CPP contributions voluntarily and take advantage of the fund's lower administrative costs as a way to save. Small firms think this is a terrific idea and it deserves consideration by finance ministers too.
PRPPs and voluntary CPP contributions are part of a list of options that we should be looking at to improve retirement outcomes for all Canadians. Given the lack of support for mandatory CPP hikes, our leaders should broaden this conversation and ensure that whatever solution is chosen has the support of the Canadians who are ultimately going to pay for it.
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