CPPIB head says pooled pensions should be mandatory

TORONTO — Ottawa’s proposal to create voluntary pooled retirement pensions won’t go far enough to cover Canadians in need of a retirement plan unless they are made mandatory and given more teeth, the head of the Canada Pension Plan Investment Board said Thursday.

TORONTO — Ottawa’s proposal to create voluntary pooled retirement pensions won’t go far enough to cover Canadians in need of a retirement plan unless they are made mandatory and given more teeth, the head of the Canada Pension Plan Investment Board said Thursday.

David Denison, president and CEO of the CPPIB, suggests enrolment in the savings devices —which allow small firms to offer their employees a voluntary vehicle to build up pension equity —should be automatic for Canadians who don’t have company-sponsored pension plans.

Mandatory plans would essentially force Canadians into setting aside more for their retirement each month, though Denison also recommended an opt-out provision. Under the proposed voluntary system, the size of benefits will depend on the size of individual contributions and the earnings by a particular PRPP.

Pension funds and retirement savings have been making headlines lately as the government tries to prepare for a looming pension crisis as baby boomers retire, drawing down funds in the system instead of contributing.

“There is much scope for improvement, as fully two-thirds of workers in Canada do not participate in a workplace assisted retirement program,” Denison said in a speech at the C.D. Howe Institute in Toronto.

But he added: “Unless some significant decisions are made as to how PRPPs are implemented, I fear that they will not increase coverage to the degree required to result in a material increase in levels of retirement savings among Canadian workers.”

Only about 4.5 million Canadians now have guaranteed benefits, most in the public sector. Many companies in the private sector have found the cost of guaranteeing benefits under defined benefit plans too expensive and, in some cases, have threatened the company’s survival.

Instead of expanding the CPP, as some pension advocates were calling for, Ottawa last year tabled legislation on the pooled registered pension plans, a move that was criticized by some for being little more than “glorified RRSPs.”

Denison said it’s important the plans have a simple default investment option, offer lower fees and allow Canadians to take accounts with them when they change jobs so they don’t end up with many small accounts.

He said it would also be important to make investment decisions easy for Canadians and help them convert the accounts into a pension-like stream of payments when they retire.

“The ultimate outcomes of the PRPP initiative will depend upon policy makers’ willingness to address these key decisions — I hope they don’t leave this as unfinished business,” said Denison, who usually avoids wading into the debate over pension plans.

Just Posted

Thousands of Albertans flock to Westerner Days on last day

Central Albertans took advantage of Sunday’s sunshine and flocked to Westerner Days… Continue reading

Former Humboldt Broncos player who survived bus crash hopes for spot on team

RED DEER, Alta. — A former Humboldt Broncos player whose back was… Continue reading

Man and dog dead after early morning house fire in Lethbridge

LETHBRIDGE, Alta. — Officials say a man and a dog are dead… Continue reading

Ottawa fights planned class action against RCMP for bullying, intimidation

OTTAWA — The federal government is fighting a proposed class-action lawsuit against… Continue reading

May says Greens will work with any party that has a serious plan for the climate

OTTAWA — With three months until Canadians vote in the next federal… Continue reading

Fashion Fridays: 5 casual summer dress styles

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

A year later, ceremony commemorates victims of the Danforth shooting

TORONTO — The names of the two people killed in a shooting… Continue reading

Relief in sight for southeastern Canada following weekend heat wave

MONTREAL — Relief is in sight for sweltering Canadians after a weekend… Continue reading

Trudeau’s former right-hand adviser playing role in Liberal election campaign

OTTAWA — With three months to go now until the election, the… Continue reading

Hotels face battle over whether to help US house migrants

DETROIT — There’s a new target in the clash over immigration: hotels.… Continue reading

Thousands visit Illinois governor mansion after renovations

SPRINGFIELD, Ill. — Thousands of people have visited the Illinois governor’s mansion… Continue reading

Canadian high school science courses behind on climate change, says UBC study

VANCOUVER — High school students in Canada may not be getting the… Continue reading

‘Us and them’: influence of Quebec anglos on decline with new Coalition government

MONTREAL — Last March, Quebec Premier Francois Legault made a mocking remark… Continue reading

Japanese Canadians call on B.C. to go beyond mere apology for historic racism

VANCOUVER — Japanese Canadians across the country are meeting to discuss how… Continue reading

Most Read