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Below is an article written by Malcolm Buchanan on Flaherty's decision to go with a private PRPP rather than an enhanced CPP.
"It is outrageous that Federal Finance Minister Jim Flaherty rejected expanding the Canadian Pension Plan [CPP] as proposed by a majority of provincial finance ministers, the Canadian Labour Congress [ CLC ], the Congress of Union Retirees of Canada [CURC] and numerous Canadians. Flaherty has been quoted previously as being in favour of a "modest" increase to CPP premiums and benefits as a way of ensuring that Canadians save more for retirement.
Flaherty has ignored the advice of pension experts such as Professor Jonathan Kesselman who has studied all the key pension reform proposals that the federal government and provincial finance ministers have been reviewing. Professor Kesselman's conclusion: " that a bigger CPP, with a mandatory increase in premiums as well as benefits, is the hands-down best choice".
Flaherty has also ignored the realities of the CPP. For example: the CPP is a secure and sound pension plan; the CPP is a low cost pension plan which provides workers with a defined benefit that is indexed to inflation, and is fully portable, from job to job, province to province; the CPP has very low administrative and management costs; the CPP is mandatory for all non-self employed workers.
The so called Pooled Registered Pension Plan [ PRPP ] proposal as put forward by Minister Flaherty is nothing more than a group RSSP plan managed by private sector financial institutions, as opposed to an employer. There is no doubt whatsoever that PRPPs will charge high management fees because they must make a profit for their share holders. Unlike the CPP, there will be no mandatory employer contribution to the PRPP; no defined benefit based on career average earnings; no inflation protection [ indexing ]; and no assurance of full portability. There will almost certainly be an opt-out provision at the discretion of a province.
Flaherty had an opportunity to the right thing but turned " chicken little" by giving in to the pressures of the private sector--the sector that helped fuel the the current recession.
The expanded CPP issue is not going to go away. Ontarians are urged to contact their MPs and MPPs urging them speak out for real pension reform and maintain pressure on Flaherty to do the right thing.
Malcolm Buchanan
President, Hamilton, Burlington and Oakville Chapter of the Congress of Union Retirees of Canada [CURC]"
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