Ben Dachis on The Exchange: Canada Post pensions
CPP: A smaller paycheque today is a good thing for Canadians tomorrow – Globe and Mail Op-Ed
Has anyone ever looked at their paycheque and said, “I sure wish they’d take more of my money”?
That was the question posed by federal Opposition Leader Rona Ambrose Monday as federal and provincial finance ministers met in Vancouver to discuss proposals to expand the Canada Pension Plan. In the end, they agreed on a sizable expansion of the CPP. Is this what Canadians really want?
I honestly think the answer is yes – at least for the most part.
The main target for a CPP expansion has been a group of middle-income individuals who don’t have workplace pensions. The public pension system will be central to financing their retirement. We know many of them simply fail to save.
CPP offers a commitment device,…
How Spending Declines with Age, and the Implications for Workplace Pension Plans
The spending habits of retirees in Canada and other developed countries demonstrate a strong tendency for personal consumption to decline with advancing age, according to a new report from the C.D. Howe Institute. In “How Spending Declines with Age, and the Implications for Workplace Pension Plans,” author Frederick Vettese suggests that this pattern has important […] CPP expansion threatens to benefit the tax collector more than the taxpayer – Financial Post Op-Ed
The threat that the roll-out of the Ontario Retirement Pension Plan (ORPP) in 2018 may further fragment Canada’s retirement system has moved Canada Pension Plan (CPP) expansion up the agenda for the June 20 federal-provincial finance ministers’ meeting. Yes, a bigger CPP looks better than the ORPP – but that is not saying much. Perhaps some higher-income Canadians could save more, but lack the foresight or discipline to do it. Even so, they – like so many lower-income earners the ORPP will hurt – might do poorly under an expanded CPP.
Why is that? Recall the standard pitch for an RRSP, or any other retirement saving plan where money going in is not taxed as income, and money coming out is. The idea is that the saver’s tax rate…
Assuming Big Returns On Pensions – What Could Go Wrong? (plenty): Globe And Mail Op-ed
What returns can we earn on our saving? In planning for retirement, few questions matter more. Project prudently and all should be well; count on a bonanza that falls through – not so good. What is true for individuals is true for pension plans. Those that forecast conservatively and back their obligations well tend to pay what they promise; those assuming turbo-charged returns to fund rich benefits on the cheap might not. So far, the debate over a bigger Canada Pension Plan (CPP) and the Ontario Retirement Pension Plan (ORPP) has skirted this question.
The going assumption – explicit in the ORPP’s numbers; implicit in conversations about “fully funded” CPP expansion – is that assets in these plans will earn 4 per cent annually…
DC Plans and the ORPP: Why Fees Matter
A flaw in the design of the Ontario Retirement Pension Plan (ORPP) could unfairly penalize employers as well as the people the plan intends to help, according to a new C.D. Howe Institute report. In “DC Plans and the ORPP: Why Fees Matter,” authors James Pierlot and Barry Gros show how employers who pay pension […] Worse Than It Looks: The True Burden and Risks of Federal Employee Pension Plans
Ottawa’s unfunded liabilities for employee pensions stood at $269 billion at the end of the 2015 fiscal year, far larger than reported, according to a new C.D. Howe Institute study. In “Worse Than It Looks: The True Burden and Risks of Federal Employee Pension Plans,” authors William B.P. Robson and Alexandre Laurin look through the […] Ontario’s Proposed Pension Plan Is Just A Notion With Major Holes: Globe And Mail Op-ed
Last week’s announcement that former Pan Am Games chief Saad Rafi will run the proposed Ontario Retirement Pension Plan makes it sound ready to go. It is not. Until Ontarians get some basic information about how the scheme is supposed to work, the ORPP is more notion than actual plan.
The provincial government has released some specs. The contribution rate: Employers and employees together will put in 3.8 per cent of covered earnings. The retirement benefit: about 15 per cent of covered earnings. The Conference Board of Canada has released a cost-benefit report paid for by the Ontario Ministry of Finance. And the government has committed, again, to launching on Jan. 1, 2017.
Notwithstanding these announcements –…
Quebec’s Underfunded Pension Plan Holds Lessons For Cpp, Orpp: Globe And Mail Op-ed
By Yves Trudel
The experience of the Quebec Pension Plan – Canada Pension Plan’s equivalent for the province – holds cautionary lessons for the country’s new pension options, such as the pending Ontario Retirement Pension Plan (ORPP) or proposed CPP enhancements. Without proper independent governance and rate-setting mechanisms, risks are great that the ORPP or an enhanced CPP will end up improperly funded, leading once again to more intergenerational transfers of wealth.
A recent C.D. Howe Institute report shows that the QPP’s contribution rate was set too low from the beginning, despite the advice of experts and actuaries. As the plan matured, multiple reports pointed to imminent needs for…
The Benefits of Hindsight: Lessons from the QPP for Other Pension Plans
The experience of the Quebec Pension Plan (QPP) offers serious lessons for new public pension plan options, in particular the pending Ontario Retirement Pension Plan (ORPP) and Canada Pension Plan (CPP) enhancements, according to a new C.D. Howe Institute report. In “The Benefits of Hindsight: Lessons from the QPP for Other Pension Plans,” authors Luc Godbout, […] Drawing Down Our Savings: The Prospects for RRIF Holders Following the 2015 Federal Budget
The 2015 federal budget’s reduction of the mandatory minimum withdrawals from registered retirement income funds (RRIFs) and similar tax-deferred accounts will reduce the risk that many Canadians will outlive their savings. Yet with yields on safe investments so low, and longevity continuing to increase, the risk is still material, according to a new C.D. Howe Institute […] False savings assumptions by Ontario pension planners: Financial Post Op-Ed
Published in the Financial Post on June 4, 2015
By Malcolm Hamilton
Malcolm Hamilton is a senior fellow at the C.D. Howe Institute and a former partner with Mercer. His paper, Do Canadians Save Too Little?, is published by the Institute.
Canadians frequently read that they borrow too much, spend too much, save too little, retire too early and live too long. The drumbeat intensifies during RRSP season but it is always there in the background, and has been for decades. I cannot remember a time when Canadians were thought to be saving enough.
Our undersaving problem is attributed to many things: financial illiteracy, personal irresponsibility, a lack of foresight and insufficient self-control, to name…