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PENSIONS DEAL IS A CASE OF “GRINDING MEDIOCRITY”
The sad outcome of last week’s Finance Ministers Meeting means 2010 will end with the federal government again showing no leadership on something that really matters to families.
The meeting was supposed to be about pensions. For two years, the Harper government has been promising to strengthen retirement incomes.
The underpinning was supposed to be an expanded Canada Pension Plan (CPP).
Instead, the result was a cop-out – probably hijacked by the right-wing views of the Alberta Minister (who has always despised the CPP) and the Quebec Minister (who is trying to get some other multi-billion-dollar deal from the feds).
So improving the CPP became road-kill. It got punted to political never-never-land.
The Ministers settled for minor tinkering which they dubbed “pooled registered pension plans” (PRPPs). Run for-profit by banks and insurance companies, they’d be yet another private sector option for retirement savings – much like others already existing.
But if this is all the Ministers come up with, they will badly fail.
PRPPs won’t solve the deficiencies facing the nearly two-thirds of Canadians who don’t have adequate savings for their retirement years. Only a better CPP has the scope to do the job. It should be the central pillar of pension reform.
Why? Because it’s more familiar and comprehensive than any private sector alternative. It’s financially sound – thanks to changes made by former Finance Minister Paul Martin back in the 1990’s.
Its investment yields are the best. It doesn’t have to extract a profit margin or a management fee. And it’s secure, unlike the plans concocted by private companies like Nortel which have gone belly-up, leaving thousands of pensioners destitute.
Any reservations about premium increases can be avoided by making a supplementary CPP voluntary.
It’s time to stop stalling and get on with building an adequate CPP for the future.