Canadians will decrease their personal savings by one dollar for each additional dollar in CPP or ORPP contributions, the Fraser Institute suggests in new research. And that will directly affect the business of financial advisors across the country.
But there’s a more fundamental concern, say some advisors increasingly skeptical about the plan.
“How can I be confident as a taxpayer in a province with twice the debt of California and increasing debt servicing costs,” Kitchener advisor Mike Gentile told WP, “that Ontario will be able to effectively administer and manage my retirement money through ORPP (Ontario Retirement Pension Plan)?”
The findings of the Fraser Institute suggest that nothing will change with the implementation of ORPP in terms of savings. However, given that most Canadians have a problem saving and are hesitant about retaining a financial advisor — Ipsos Reid’s 2014 poll found less than 40% of Ontarians use one — it stands to reason that forced savings might be the way to go.
“Needless to say, people do not line up at any financial institution to make voluntary deposits to RRSP’s and TFSA’s,” wrote Gentile. “I believe that it is reasonable to say that in many, if not most, cases, it is the responsibility of financial advisors like myself, to persuade and educate people on how to save and how to benefit from various financial instruments.”
The real problem according to Gentile is that it’s almost impossible to imagine the province of Ontario doing anything successfully when it comes to money management.
“It would appear on the surface at least, that the provincial Minister of Finance in the Province of Ontario is a very accomplished individual,” Kitchener advisor. “What I don’t understand is how he [Charles Sousa] and the provincial government arrived at the conclusion that it would be in the best interest of Ontarians to have another pension plan administered by another level of government.”