Pooled Registered Pension Plans not the answer to pension crisis: study

December 7, 2011

OTTAWA—The newly proposed Pooled Registered Pension Plan (PRPP) program will do nothing to solve Canada’s pension crisis, says a study released today by the Canadian Centre for Policy Alternatives (CCPA).

The study, by pension expert and CCPA research associate Monica Townson, provides an analysis of the PRPP program and argues that expanding the Canada Pension Plan (CPP) would provide better retirement pensions to virtually all Canadians.

“The PRPP scheme will not help the baby boom generation now coming up to retirement. They are the ‘lost generation’ when it comes to retirement income,” says Townson. “Pension reform should be addressing their needs in particular. We can almost certainly expect poverty rates among seniors to start going up again unless something is done.”

According to the study, the PRPP program is yet another voluntary savings vehicle and will not guarantee a pension. Since less than one-third of Canadians entitled to contribute to RRSPs actually do so, it is not clear why officials are claiming the proposed PRPPs will prove more attractive.

Improving CPP benefits would address the two key issues in the pension system causing concern: the lack of coverage in workplace pension plans; and the fact that individuals are not saving for retirement on their own.

Among Canadians about to retire (those aged 55 to 64), the typical person with an RRSP has saved about $55,000. Roughly one-third of Canadians aged 45 to 64 are likely to end up with incomes that fall short of adequate minimum incomes and/or incomes that will allow them to maintain their standard of living when they retire.

An expanded CPP would provide better retirement pensions to virtually all Canadians. 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.

“Canada does not need yet another voluntary tax-assisted retirement savings program. It needs public pensions that provide all Canadians with a basic guarantee of adequate income that will protect their standard of living in retirement,” Townson says. “Expanding the Canada Pension Plan would meet that objective.”


Pension Breakdown: How the finance ministers bungled pension reform is available on the CCPA website: http://www.policyalternatives.ca

For more information contact Kerri-Anne Finn, Senior CCPA Communications Officer, at 613-563-1341 x306.