Op-Eds
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…
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…
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%…
Published in the Financial Post on June 11, 2011
By William B.P. Robson
The recent economic crisis highlighted the weak foundations of defined-benefit (DB) pension and social-security schemes around the world. The Canada Pension Plan appears to have weathered that storm well, and some are advocating an expanded CPP to alleviate risks of low incomes in retirement. Proposals for a bigger CPP that talk of guaranteed or “fully funded” benefits may mislead distressed savers, however, since the CPP offers target benefits, not guarantees, and proposed increases would not be fully funded as most people understand the term.
Treat the CPP as a DB plan making firm promises, and it would need investment returns materially…
Published in the Financial Post on April 8, 2011
By Finn Poschmann
When Jon Kesselman of Simon Fraser University and I published "A New Option for Retirement Savings: Tax-Prepaid Savings Plans," the roadmap for what was to become TFSAs, we had high hopes for tax free savings accounts. I doubt we would have believed anyone who told us that in less than 10 years' time nearly five million Canadians would hold these accounts, but we would have agreed that if you built it, they would come -and Canadian savers did. For folks in the tax policy business, TFSAs are a grand slam.
TFSAs, of course, are the arithmetic nearequivalent mirror image of registered retirement savings plans, and appeared in their current form courtesy…
