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OTTAWA—Expanding the Canada Pension Plan would be the most effective way to ensure all Canadian have adequate retirement incomes, says a new report by the Canadian Centre for Policy Alternatives (CCPA).
The report, by pension expert and CCPA Research Associate Monica Townson, provides an analysis of the options for expanding the CPP in order to address Canada’s pension difficulties.
“There is now widespread concern that unless changes are made, a significant number of workers will reach retirement age without sufficient income to support themselves,” says Townson.
“Only 38% of workers have a workplace pension plan and private savings through RRSPs are woefully inadequate. The average amount held in RRSPs by those aged 55-64 is estimated at about $55,000.”
In comparison with other countries, Canada’s public pension programs provide relatively low replacement rates, covering incomes up to the level of the average economy-wide wage. Comparable programs in other OECD countries cover income levels up to almost double the average wage in those countries.
The CPP is seen as secure, reliable, cost-effective, and well managed. It covers virtually all Canadian workers, whether employed or self-employed, full-time or part-time, it is fully portable when workers change jobs; it is indexed for inflation; and it accommodates the different work patterns of women.
“Expanding the CPP, whether by increasing the replacement rate or increasing the level of covered earnings, or both, would address the issue of coverage, security of benefits, and low cost of administration—all the key objectives of pension reform,” Townson concludes.
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Options for Pension Reform: Expanding the Canada Pension Plan is the final report in a series on pension reform released by the CCPA. What Can We Do About Pensions?, provides an overview of the issue and A Stronger Foundation: Pension Reform and Old Age Security examines the Old Age Security system.
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