Most Commented: Ontario Pension Plan will 'screw' your clients

Most Commented: Ontario Pension Plan will 'screw' your clients

Most Commented: Ontario Pension Plan will 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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  • Mark Matsumoto 2014-05-13 12:32:19 PM
    The Ontario government's plan will make life much more difficult for the younger people and will put Ontario's finances in a worse position for many decades.
    I haven't looked closely at the proposal, but they are essentially setting up huge future liabilities without having the ability to pay for them.
    If a baby boomer (55 or 67 years old) comes to me and says that he wants to start saving for retirement, he has to save a huge amount or settle for a minimal retirement income. The Ontario government is proposing to pay the bulk of the population an income without having the money to pay for the proposal. They will have to either charge huge premiums or pay for it with more debt.
    I am a baby boomer and will benefit from the plan. I will receive much more than I have to pay into their plan.
    The proposal is like being financially responsible for your parents and their actions and commitments forever, even after they're gone. It is like them spending more than they make, running up their limitless Visa accounts to supplement their income, make their lives better and leaving the next generation to pay for it.
    I expect that there will be a crisis in elder care and health care and huge deficits when the baby boomers retire when you have more retired people than working people and the Liberals want to add to the problems.
    It is similar to what happened in Greece where they have been living on debt forever and they finally ran out of credit. It is like the stagnant economy in Japan where they have the oldest population in the world.
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  • John Davis 2014-05-13 4:11:24 PM
    I believed this a most ill conceived the Liberal Government has proposed and feel it is all about securing another term - In the past 40 years I have saved in my RRSP (self-employed) and during that time had to go without things and a lower lifestyle - I am pleased to say today that I have sufficient funds in my RRSP to produce a monthly income in excess of $6,000 - Honestly, I do feel sorry for those who were not prepared to sacrifice a bit today to have a great tomorrow - on this basis coupled with the Liberals past history, my vote will go to another party - not sure which one yet as they all are promising everything which costs the taxpayer, you and I more.
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  • Murray Schultz 2014-05-15 12:01:15 PM
    Once again an Ontario government with a significantly diminished mandate concocts a plan to save its own skin while pretending to have superior financial acumen. Of course the politicians who propose to set this plan in motion have zero exposure to its consequences; intended or otherwise.
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