By: Jeff Sanford
The recently-announced plan by Ontario Liberals to set up a dedicated government-run pension plan is not sitting well with some Ontario financial advisors.
A poll conducted last week by Wealth Professional found most advisors are against the idea, and in interviews this week Ontario advisors were more than happy to describe their dismay with the plan.
“It’s the stupidest thing. Who is going to pay for this?” wonders Mark Matsumoto, an independent financial advisor based in Toronto. “The leading edge of the boomers is already retiring. It’s like the government is saying ‘we’ll save for five years and pay for everyone.’ Well, that’s just crazy.”
It is no small secret that many Canadians have not saved for retirement. At the same time other Canadians have saved. By addressing this issue through a proposed new government run plan advisors worry the government will “crowd out” private savings.
“The general guidelines for saving are to put away 10 per cent of earnings,” says Matsumoto. "Well, I’m self-employed, so I pay the employer and employee contributions, and that’s 10 per cent.
"And now we’re going to tax you some more? This is crazy. Nobody is setting up a defined benefit pension plan these days. But here is the government setting up a brand new one. This is vote-buying?
Liberals hope to be seen addressing what is a rather large issue facing Canadians. There is a massive $638.6 billion in total unused RRSP contribution room as of 2011 that has been accumulating since 1991. Only 24 per cent of eligible tax filers contributed to their RRSP in the most recent tax year. The potential issues here - poverty-stricken seniors, plunging consumer spending - are real. But the Liberal plan would penalize those who have saved, which, to the conservative mind is patently unfair.
Last week, Ontario Premier Kathleen Wynne described a meeting with Prime Minister Stephen Harper in which Harper now famously ‘smirked’ when Wynne brought up the idea of a new Ontario Pension Plan. At the time Liberal supporters were quick to portray the event as another example of Harper’s perceived coldness. But advisors familiar with the ins-and-outs of the private versus public savings plans in Canada understand perfectly well Harper’s reaction.
“The people who didn’t save will be bailed out. The ones who did save, they’re saying ‘screw you.’ The Liberals have no respect for taxpayers,” says Matsumoto.
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