New report gives thumbs-up to CPP expansion

A report by a consulting firm is giving the expansion of the Canada Pension Plan a glowing review

A new report by consulting and technology firm Morneau Shepell is giving the expansion of the Canada Pension Plan a thumbs-up.

The plan is the most significant change to the country’s retirement income system in half a century, and some have raised questions about whether the changes are for the better. Fred Vettese, chief actuary at Morneau Shepell, said the arguments against the expansion are familiar ones.

“There are evident parallels between the resistance that greeted the original CPP implementation and present-day arguments against expansion,” Vettese said. “This provides an opportunity to assess the events that are now unfolding from a historical perspective.”

In Morneau Shepell’s report on the plan, Vettese highlights seven factors that drove the reform, including pressure from labour groups, shortcomings in Pillar 3 savings, government intent to raise the standard of living for retired workers, and the nation’s falling behind international benchmarks. A major driver was the growing population of seniors, according to the report; since 1996, the ratio of seniors to the working population has doubled, from 13.3% to 26.5%. That population will reach 40% within 20 years, the report projected.

Ultimately, there was a good case to be made for CPP enhancement, the report argues.

“If Canadians were far more comfortable in dealing with financial matters surrounding retirement, then maybe CPP enhancement would not have been necessary,” Vettese said. “That, however, is not the case and a bigger CPP is the simplest way to mitigate future problems. Once we get used to the bigger CPP, we expect it will become an integral part of Canadian culture.”


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