The future of pensions

While Jim Flaherty and the provinces continue to debate CPP reform, Kevin Milligan considers the options.

Recent reviews of the Canadian retirement income system by Jack Mintz and Bob Baldwinhave concluded that the public system already in place does well in ensuring sufficient retirement income for those in the bottom two-fifths of the population. Research by Statistics Canada indicates that more than two-thirds of lower-earning Canadians have more income in retirement than they did at age 50. The pension problem, such that it is, can be found among those in the top three-fifths of the population who do not receive benefits from an employer-sponsored pension plan.

The CPP affects almost everybody. The pension problem identified by these recent pension reviews is one that affects middle-to-high earners without a workplace pension. This presents a fairly obvious mismatch. Is a bigger CPP really the solution for high earners who aren’t saving enough? Should we invest a lot of public policy effort to ensure that high earners can spend their retirement days in Florence instead of Florida? I still need to be convinced that a more targeted solution wouldn’t be more appropriate.

Milligan reviews some of the proposals, including the last Liberal campaign proposal of a “secure retirement option” and Thomas Mulcair’s proposal of a pension exchange. Mr. Mulcair’s leadership website seems to have mostly disappeared, but his policy paper on retirement security is preserved for posterity here.




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The future of pensions

  1. I’ll start worrying that a well run public pension plan is becoming a “behemoth” when we all get concerned that taxpayers via CMHC and the Bank of Canada are backstopping giant financial institutes that are making disproportionately risky investments.

  2. Flaherty’s just ragging the puck on this one, and making up the rules of the game (unanimity among the provinces isn’t a prerequisite for reform) as he goes along.

    What does he care? When the timing is right for him, he’ll leave politics, and make his bazillions as a trophy board member of half a dozen major corporations.

    • What on earth could that ambulance-chasing zero contribute to a board? I frankly don’t have a clue what the front bench of the entire Conservative party will be doing once they leave politics. A more mediocre set of talents I have rarely seen.

      Mind you, I can honestly say that about everyone’s front bench these days.

      • Mike Harris, the failed teacher and former golf pro, ended up chairing Magna’s board…go figger. These guys are recruited, as I said, to sit as trophies on the boards of big business.

        • Which is why I took profits when he did. They are there to act as figureheads and rubber stamp executive decisions however you never know when someone like Mike may wake up one day and decide he wants to make a REAL decision. As Mr Buffett says (and I’m paraphrasing), only own a business that could be run by idiots because one day it probably will.

  3. Surely the country has more important concerns than making sure the wealthy can retire in the lap of luxury. If they’re not saving enough, why the hell should the state do it for them?

    • “the wealthy”?

      • Fine, “middle-to-high earners”. The state still shouldn’t be taking responsibility for their retirement savings. Should the government save money for them to take an annual state-mandated vacation as well? Seriously, this is craddle-to-the-grave nannystatism.

        • We must be watching different movies. The pension reforms being discussed (and repeatedly delayed) spring from the need to establish reasonable minimum retirement incomes for the most vulnerable, who’ve worked all of their lives without means to save for their old age.

        • But, having re-read Wherry’s post, I concede your point about people with disposable income in their highest-income-earning years needing to take responsibility for retirement planning.

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