The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance
Department of Finance Canada
140 O'Connor Street
Ottawa, Ontario K1A 0G5
I am writing an open letter to urge you to show leadership and honour your commitment to meet and work with the provinces to provide Canadians with the opportunity to increase their retirement investments in the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP). As I am sure you are well aware, most seniors retiring today will not have the pensions savings that pensions experts recommend for a comfortable retirement. With the eligibility changes to the Old Age Security (OAS) your government has made effective beginning in 2023, the pension savings of future generations are made even more precarious. Canadians are demanding that real action on pensions is needed. In fact, polls show that 75 per cent of Canadians want to increase their contributions to the CPP/QPP.
The CPP and the QPP are the backbone of our pension system. No other retirement savings vehicle provides the same advantages at so little cost. Eleven-million Canadians have no other pension plan on which they can rely. As I am sure you are well aware, 93 per cent of working Canadians have invested in the
CPP/QPP and depend on it for their retirement savings.
The CPP/QPP remains the most stable and most affordable means of retirement savings for the vast majority of Canadians. However, as more and more Canadians no longer have access to traditional workplace pensions, the replacement rate of CPP/QPP is increasingly inadequate. The average CPP benefit is just $534 per month. Even when combined with OAS/GIS benefits, this results in an annual retirement income of just $18,000 which is below the Low Income Cutoff Line. The limiting of CPP/QPP to just 25 per cent of average pre-retirement income, even when combined with other government benefits, leaves Canadians far from the 70 per cent replacement goal of retirement savings most pension experts agree on.
A modest increase in premiums can finance a doubling of CPP/QPP benefits for all Canadian workers. This would provide real and sustainable retirement security. This increase in CPP premiums would cost less to an individual than would be paid in fees for a private savings plan, making it the most affordable retirement savings option available in this country. In addition, increasing contributions would save the government revenue in the long run by decreasing the number of Canadians who would need to rely on the GIS.
I want to reiterate, that this is an opportunity for you to honour your commitment to Canadians. It is time for you to stand up and show real leadership, and negotiate with the provinces for the betterment of all Canadians' retirement future. You have the opportunity to do the right thing and improve the pension savings of all working Canadians in this country.
Irene Mathyssen , MP
NDP Pensions Critic