·  by Hugh Mackenzie   ·  CCPA

Zombie Ideas on Pension Reform Rise Again

This article appears in the Canadian Centre for Policy Alternatives' blog Behind the Numbers.


The insurance industry has enjoyed tremendous profit on their retirement savings “products” for Canadians. The potential Canada Pension Plan (CPP) enhancement and the looming Ontario Retirement Pension Plan (ORPP) pose major threats to the industry. Keith Ambachtsheer and Edward Waitzer’s recent call for for private competition to the ORPP is yet another example of the industry’s resistance to a sensible, comprehensive public pension plan.

Before discussing the specific problems with the Ambachtsheer and Waitzer proposal, it is useful to look back at the financial industry’s continual resistance to reform on retirement security.

For decades, the industry and its advocates steadfastly denied that there was a problem with Canada’s retirement income system. It ignored the fact that in the private sector, pension coverage had never been above 50 percent of employees and had been steadily declining. Today, only about one in eight private sector employees belongs to a defined benefit (DB) pension plan. It ignored the fact that savings through the registered retirement savings plans (RRSPs) fell far short of what would be required to provide an adequate standard of living in retirement. It brushed off concerns that Canada’s world-leading mutual fund fees – the fees charged by those financial institutions for managing our money—constituted an excessive drain on individual retirement savings.

The financial services industry ignored the changing reality of the Canadian workplace. Changes in Canada’s labour market have made it highly unlikely that an employee would work for the same employer for a working lifetime and retire from that employment.

When the late Conservative finance minister, Jim Flaherty, made the CPP expansion a political priority, Canada’s financial services industry and its advocates resisted. The Flaherty initiative ran head-on into the power of the industry, when then-Prime Minister Stephen Harper abruptly terminated the process in December 2013.

But Canadians continued to demand adequate retirement income through the CPP. Unable to make the issue go away, the federal government created the Pooled Registered Pension Plan (PRPP) – a voluntary initiative that was supposed to solve the retirement savings problem but would largely benefit Canada’s insurance industry.

Complete article on CCPA's Behind The Numbers Blog

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