Friday, December 31, 2010

Conservatives Continue To Abandon Canadian Seniors

Latest Goodale Update:


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.

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1 comment:

Anonymous said...

Investment management is very much 'What have you done for me lately... like last quarter?'

Fugget public vs. private thinking. Think performance. Since inception CPPIB has performed fairly well in the range of 10% more or less per annum.

Flaherty has harmed seniors with both types of sins. He's committed the sin of not doing anytime during 2007-2010. And in 2006 he committed the sin of damaging an asset class that hundreds of thousands of seniors can use in their portfolios.

Actually none of the parties have impressed.