Comparing Nest Eggs: How CPP Reform Affects Retirement Choices
Reforms underway to the Canada Pension Plan (CPP), which impose higher penalties for opting to receive CPP before age 65 and greater rewards for delaying take-up until after 65, were meant to ensure people do not have a strong financial incentive to retire early and take-up CPP at age 60, according to a report from […] Clerks fund pensions of deputy ministers: Financial Post Op-Ed
Published in the Financial Post on April 12, 2012
By Geoffrey Young
Two budgets — in Ottawa and Ontario — have announced reforms to rich defined-benefit pension plans enjoyed by government employees. The federal government will raise employee contributions and the normal age of retirement to 65 for new employees, while Ontario will consider reducing benefits to future pensioners to help fund potential pension plan deficits.
Governments are scrambling to keep employee defined-benefit (DB) pension plans sustainable because their employees love them — yet many government employees would be better off if the plans were redesigned. These DB plans systematically transfer income away from groups of employees in…
Winners and Losers: The Inequities within Government-Sector, Defined-Benefit Pension Plans
The payout formulas for defined-benefit (DB) pension plans, such as those typically provided to government employees across Canada, produce little-acknowledged yet striking inequities, according to a report from the C.D. Howe Institute. In Winners and Losers: The Inequities within Government-Sector, Defined-Benefit Pension Plans, Geoffrey Young shows how plan formulas can produce redistribution of retirement income […] Ontario’s Budget – True Pension Costs Finally Revealed: Financial Post Op-ed
Published in the Financial Post on March 28, 2012
By Colin Busby and Alexandre Laurin
Ontario’s controversial deficit-cutting budget, tabled Tuesday, will be passed around like a political hot potato by opposition parties at Queen’s Park. Should it get enough votes to pass parliament, it would sprinkle cost-cutting measures across provincial programs, freeze planned reductions in corporate income taxes, and reduce the likelihood of higher taxpayer contributions to public-sector pension plans, among many other initiatives.
The 2012 budget was highly anticipated by a public eager to see how the province would respond to the Drummond commission report to reform Ontario’s public services. And the province’s credit…
Later Retirement: The Win-Win Solution
Over the coming two decades, people are likely to stay in the workforce much longer – by about five years – according to a report from the C.D. Howe Institute. In “Later Retirement: The Win-Win Solution,” author Peter Hicks finds there will be a strong trend towards later retirement by babyboomers as a result of […] What to do About Seniors’ Benefits in Canada: The Case for Letting Recipients Take Richer Payments Later
Ottawa should move to reform seniors’ benefits in the upcoming budget by letting recipients choose richer payments, later, from the Old Age Security and Guaranteed Income Supplement programs if they wish, according to a report from the C.D. Howe Institute. In “What to do About Seniors’ Benefits in Canada: The Case for Letting Recipients Take […] La retraite à deux vitesses : comment s’en sortir?
Les gouvernements devraient supprimer toutes les limites fiscales de cotisations aux régimes de retraite et les remplacer par une marge d’accumulation à vie indexée de 2 millions $, laquelle s’appliquerait à la valeur globale de l’actif de retraite amassée dans tout régime dont un individu est bénéficiaire, selon un rapport récent de l’Institut C.D. Howe. […]Before reforming pensions, MPs must tackle their own: Globe and Mail Op-Ed
Published in the Globe and Mail on January 19, 2012
By William Robson
Debate over retirement income is hot. It’s partly that Canadians are getting older. But it’s mainly the growing realization that the next generation of retirees may live less comfortably than their parents have done. People are living longer, and returns on investment are lower. So hitting the targets their parents achieved means today’s workers must retire later and save more.
Further raising the temperature is Canadians’ learning that the stresses affecting their own retirements do not affect the government employees whose pensions they backstop – federal employees heading that list.
Ottawa’s pension plans provide benefits far richer and…
It’s Time To Act On Pension Reform: Globe And Mail Op-ed
Published in the Globe and Mail on Dec. 21, 2011
By Keith Ambachtsheer and Edward Waitzer
Canada’s federal and provincial finance ministers are gathering on Monday in Victoria, B.C., to determine the fate of pension reform in Canada. The most constructive thing they could do is to make the current federal Pooled Registered Pension Plan proposal work better for Canadian workers who do not have a workplace pension plan.
PRPP success hinges on an agreement to do three things: First, require employer participation; second, specify a well-designed default option; and third, create a fit-for-purpose fiduciary oversight mechanism.
The federal government’s Bill C-25, tabled last month, and accompanying draft…
Saving Pooled Registered Pension Plans: It’s Up To the Provinces
The federal government’s design for Pooled Registered Pension Plans (PRPPs), as proposed in Bill C-25, has flaws that need fixing to meet the needs of Canadians without a workplace pension plan, according to a report released today by the C.D. Howe Institute. In “Saving Pooled Registered Pension Plans: It’s Up To the Provinces,” authors Keith […] Ottawa’s Pension Gap: The Growing and Under-reported Cost of Federal Employee Pensions
The federal government’s unfunded liabilities for its employee pension plans total $227 billion, far more than reported, according to a report released today by the C.D. Howe Institute. In “Ottawa’s Pension Gap: The Growing and Under-reported Cost of Federal Employee Pensions,” authors Alexandre Laurin and William Robson find that, using fair-value accounting like private-sector plans […] Ottawa’s $285-billion Pension Promises: Financial Post Op-ed
Published in the Financial Post on Dec. 13, 2011
By Alexandre Laurin and William Robson
Suppose a Canadian not employed by the federal government wanted to set aside a nest egg that would provide retirement income like that promised to a federal employee. He or she would invest in a security that is backed by taxpayers and indexed to inflation. Such a security exists: the federal government’s real return bond (RRB). The amount this person would need to put aside to achieve his or her goal — leaving aside retail costs and ignoring for the moment the tax limits on individual saving that would obstruct the project — would be a function of the yield on the RRB.
On March 31, 2011, the RRB yield was not the 4.2%…