Ontario Premier Kathleen Wynne optimistic about consensus to increase CPP benefits
A hike to Canada Pension Plan contribution rates would be a “drastic step,” according to Conservative finance critic Lisa Raitt, who says it’s not necessary, as most Canadians are poised to retire with enough money.
Finance Minister Bill Morneau will meet with his provincial counterparts in Vancouver on Monday, and a plan to expand the pension plan will be at the top of the agenda. Some premiers, notably Ontario’s Kathleen Wynne, have been pushing to boost benefits, which is only possible with an increase in premiums paid by workers and employers.
“I don’t believe that the minister of finance has made a case based on evidence as to why we need to take such a drastic step of increasing everybody’s cost across the board in order to get a benefit in the future,” Raitt said in an interview with Chris Hall on CBC Radio’s The House.
Morneau has promised to reach an agreement on a CPP enhancement by year’s end, and Wynne signalled in a separate interview with Hall Friday that there now appears to be a consensus among the provinces, after a period of wrangling.
“I am more optimistic. It’s a different moment than it was even a few weeks ago, there is more of a potential for some success,” she said, adding she would be willing to ditch her plan to launch an Ontario retirement pension plan if a CPP deal is achieved.
Prime Minister Justin Trudeau said Thursday that he wanted to ensure “Canadians are going to be able to afford the things they need in the present while ensuring retirement security for as many people as possible.”
But Raitt called it a solution looking for a problem.
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“Canada ranks above everybody else in being prepared for retirement,” Raitt said, citing a recent OECD study. “We have all kinds of other vehicles to allow for savings other than the traditional pensions that are set aside,” she said, noting that many other financial products, including equities held in an RRSP, often deliver a better rate of return than funds invested in the CPP.
The former Conservative cabinet minister said Finance Canada itself has found that Canadians are in good shape for retirement, with 83 per cent of households on track for a comfortable retirement.
“If we’re dealing [with] a cohort of only 17 per cent, figure out who it is, and then develop those tools specifically for those cohorts to have them save for the future,” Raitt said, citing a McKinsey study commissioned by the last government.
The maximum CPP payout stands at $1,092.50 per month, although the average payment is closer to $500 a month.
Wynne said those payments are simply not enough, and relying on RRSPs won’t cut it, as the vast majority of Canadians do not contribute the maximum allowable amount each year.
“It’s not working and that’s the problem. If everyone was taking advantage of all the tools that were available, and everybody had a secure retirement ahead of them, then we wouldn’t have to have this conversation. People are not able to save, they’re not able to use those instruments.”
She said Raitt and the federal Conservatives stand alone in thinking there is not an issue with retirement savings.
“Across the country there’s been a pretty clear acknowledgment, certainly among finance ministers, and the premiers as well, that there is a problem. Nobody [else] is arguing that there isn’t a problem.”
Opposition kept in the dark
Raitt said she’s troubled that negotiations between the federal government and the provinces are already in full swing, and yet Parliament has been kept in the dark.
The Milton, Ont., MP said she has heard from some stakeholders that the government is considering a phasing-in option for businesses — which would raise contribution rates over time — but has had trouble getting further information from the government itself.
“I’m not getting any answers. I’m being told that they’ve made a commitment that they’re going to do this come hell or high water, and we’re not being told how much it’s going to cost Canadians,” she said.
“I’m going to be like every other Canadian — waiting to see what these guys, locked in a room, have decided how they’re going to spend my tax dollars and put another $3,000 on my bill.”
But Wynne rejected the idea that a CPP boost is some sort of tax. “This is not what this is. This is not money going into government coffers. This is money being invested in an individual’s future,” the premier said.
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