After a lifetime of hard work, no one should have to retire in poverty. But if you or a family member is worried about being able to afford to retire, you’re not alone. Today, nearly two in three working Canadians – that’s 11 million workers – have no workplace pension plan.
With baby boomers about to retire in unprecedented numbers, the Conservative federal government largely ignored the looming crisis and insisted Canadians can just fend for themselves.
Now Canada has a new government that made a campaign commitment to expand the Canada Pension Plan (CPP), and this weekend, provincial and federal Finance Ministers are meeting to discuss the issue. Therefore, the Canadian Labour Congress is calling on the provinces to work with the federal government to realize their campaign pledge by committing to universal expansion of the CPP.
“Without government action, we are going to see seniors’ poverty continue to rise,” said CLC President Hassan Yussuff. “Fortunately there is a simple, fair, safe and effective solution: universal expansion of the CPP.”
It’s time for a universal expansion of the CPP:
- The CPP benefits everyone. It follows workers anywhere in Canada, no matter how many times they change jobs.
- The CPP is cost-effective. The CPP works well with low-management fees because of its universal and straightforward application. It keeps up with the cost of living and pays out benefits for life.
- The CPP is safe. Financed exclusively by workers and their employers, regardless of how the stock market performs, the CPP will be there when we need it.
The rate for CPP contributions was originally set up assuming that most workers would be able to supplement CPP savings with workplace pension plans. But now that employers are abandoning workplace pensions, the CPP is the only way in which most workers, especially young workers, routinely save for retirement.
Even a workplace pension isn’t always enough to guarantee retirement security. More and more workplace pension plans are seeing benefits reductions. And with life expectancies continuing to increase, employees covered by defined contribution plans run the risk of outliving their pension. The CPP doesn’t have that problem: it pays out benefits for life.
A small increase in Canada Pension Plan contributions could help make things easier. For less than a cup of coffee and a donut a day, the average worker could double their CPP benefits at retirement. Repeated polling has shown that an overwhelming majority of Canadians already support expanding the CPP through a small increase in contributions.
“I hope the Finance Ministers take a serious look at the retirement crisis our country is facing. Expanding the CPP for all working Canadians today is the best way to fight seniors’ poverty tomorrow,” Yussuff concluded.