Expanding the Canada Pension Plan: Myths Debunked
Myth #1: The economy is too fragile to increase CPP contributions now
The last time CPP contributions were increased was 1997. During the entire seven years the increase was phased in, employment rose and the economy steadily grew – and that time benefits to workers weren’t even increased.
Myth #2: The Canada Pension Plan is a job-killing tax.
CPP contributions are not a tax. They are savings put aside in return for a pension benefit in retirement. They are an investment by workers and their employers into a pension plan that is safe and sound. The savings in the CPP will eventually be spent in 10, 20 and 30 years, and will help create jobs in the future.
Corporations have more than enough room to contribute to expanding the CPP, which will provide greater future retirement benefits for today’s workers. Companies outside the banking industry have seven times as much cash in the bank than they did last time CPP contributions were raised. Businesses’ income tax has also dropped 13 percentage points since the 1990s.
Myth #3: Millions of jobs will be lost if CPP premiums are increased.
Increasing CPP premiums has never cost us jobs. In fact, people with better pensions will be able to spend more in their retirement – and that spending creates jobs.
Myth #4: Small businesses are against an expansion of CPP.
Small businesses know that CPP is the best value for their money with its low management costs, portability and security. As self-employed workers, owners are contributing and benefiting from CPP. Expanding the CPP gives small business owners the risk-free stability of a defined-contribution savings plan, and a guaranteed defined-benefit pension plan for their workers. A poll of small businesses in Ontario showed that a majority of small and medium-sized businesses favoured an expanded CPP.