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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Health Minister Tyler Shandro and Dr. Deena Hinshaw, the chief medical officer of health, receive flu shot. Photo via Government of Alberta
COVID cases climb in central zone, Red Deer

The total number of active COVID-19 cases in the province reached 3,138… Continue reading

Many rural municipalities were concerned about a proposed reduction to their industrial revenues, but Alberta’s municipal affairs minister has come up with an alternative solution. (Photo contributed)
Energy industry support won’t injure municipalities

Creating new wells or pipelines would result in a three year ‘tax holiday’

Conservative Leader Erin O’Toole and Premier Jason Kenney participated in a livestream on Oct. 17, 2020. (File photo by THE CANADIAN PRESS)
UCP members pass resolution at AGM calling for privately funded health care option

EDMONTON — Members of Alberta’s governing United Conservative Party have narrowly endorsed… Continue reading

“We weren’t sure what to expect with just doing the 50/50. We have been positively surprised with sales so far,” says Craig Fleming, co-chair of the Red Deer Kinsmen Club’s raffle. (Photo by SUSAN ZIELINSKI/Advocate staff)
Non-profits put their money on 50/50 draws

COVID impacts fundraising events

Student taking a math test. (Pixabay photo)
David Marsden: Students need more testing, not less

Testing has been central to Alberta’s response to the COVID-19 pandemic. It’s… Continue reading

Gillian Robertson celebrates her win over Sarah Frota during UFC 240, in Edmonton, Saturday, July 27, 2019. Robertson used her superior grappling skills to dominate Brazil's Poliano Botelho en route to a unanimous decision win Saturday night on a UFC Fight Night card. THE CANADIAN PRESS/Jason Franson
Canadian Gillian (The Savage) Robertson dominates in UFC decision win in Abu Dhabi

Canadian Gillian (The Savage) Robertson dominates in UFC decision win in Abu Dhabi

Forge FC head coach Bobby Smyrniotis, right, hugs captain Kyle Bekker following their victory in the Canadian Premier League soccer final against Cavalry FC in Calgary, Saturday, Nov. 2, 2019. A month after winning the Island Games in Charlottetown, Hamilton-based Forge FC is back on the move. THE CANADIAN PRESS/Jeff McIntosh
CPL champion Forge FC off to El Salvador for CONCACAF League preliminary-round match

CPL champion Forge FC off to El Salvador for CONCACAF League preliminary-round match

Course workers prepare the landing area at the ski jump venue in Whistler Olympic Park in Whistler, B.C. Friday, Feb. 5, 2010. THE CANADIAN PRESS/Jonathan Hayward
Next generation of Canadian ski talent sets sights on Whistler, B.C., in 2023

Next generation of Canadian ski talent sets sights on Whistler, B.C., in 2023

Mighty Heart is held by groom Siobhan Brown in his stall at trainer Josie Carroll's stable at Woodbine Racetrack, in Toronto, Thursday, Oct. 15, 2020. The one eyed horse, will run in the $400,000 Breeders' Stakes on October 24, attempting to become Canada's first horse to win the Triple Crown since Wando in 2003. THE CANADIAN PRESS/Chris Young
Rain could present big challenge in Mighty Heart’s quest to capture Triple Crown

Rain could present big challenge in Mighty Heart’s quest to capture Triple Crown

Veteran sniper Evgenii Dadonov excited to join Senators: ‘It’s a perfect fit’

Veteran sniper Evgenii Dadonov excited to join Senators: ‘It’s a perfect fit’

Tampa Bay Buccaneers running back Ronald Jones II (27) gets pushed out of bund by Green Bay Packers free safety Darnell Savage (26) during the second half of an NFL football game Sunday, Oct. 18, 2020, in Tampa, Fla. (AP Photo/Mark LoMoglio)
Packers seek to bounce back after embarrassing defeat

Packers seek to bounce back after embarrassing defeat

World junior hockey championship opens on Christmas Day for first time since 2005

World junior hockey championship opens on Christmas Day for first time since 2005

Most Read