Retirement Saving and Income - Op Eds

Earlier this week, The Globe and Mail revealed internal research by government officials showing a global trend toward older normal pension ages, with most OECD countries’ target policy retirement age to be raised to at least 67 by around 2050. An eventual increase in the normal retirement age, here in Canada, appears inevitable.

Despite this trend, Ottawa recently reversed course and cancelled a scheduled gradual increase in the Old Age Security (OAS) eligibility age from 65 to 67, to be fully implemented by 2030. The recent decision fails to recognize longer life expectancy since the 65-year-old benchmark was adopted, and the current marked trend towards later retirements. Projections show that by 2030, about 40 per…

Has anyone ever looked at their paycheque and said, “I sure wish they’d take more of my money”?

That was the question posed by federal Opposition Leader Rona Ambrose Monday as federal and provincial finance ministers met in Vancouver to discuss proposals to expand the Canada Pension Plan. In the end, they agreed on a sizable expansion of the CPP. Is this what Canadians really want?

I honestly think the answer is yes – at least for the most part.

The main target for a CPP expansion has been a group of middle-income individuals who don’t have workplace pensions. The public pension system will be central to financing their retirement. We know many of them simply fail to save.

CPP offers a commitment device,…

The threat that the roll-out of the Ontario Retirement Pension Plan (ORPP) in 2018 may further fragment Canada’s retirement system has moved Canada Pension Plan (CPP) expansion up the agenda for the June 20 federal-provincial finance ministers’ meeting. Yes, a bigger CPP looks better than the ORPP – but that is not saying much. Perhaps some higher-income Canadians could save more, but lack the foresight or discipline to do it. Even so, they – like so many lower-income earners the ORPP will hurt – might do poorly under an expanded CPP.

Why is that? Recall the standard pitch for an RRSP, or any other retirement saving plan where money going in is not taxed as income, and money coming out is. The idea is that the saver’s tax rate…

What returns can we earn on our saving? In planning for retirement, few questions matter more. Project prudently and all should be well; count on a bonanza that falls through – not so good. What is true for individuals is true for pension plans. Those that forecast conservatively and back their obligations well tend to pay what they promise; those assuming turbo-charged returns to fund rich benefits on the cheap might not. So far, the debate over a bigger Canada Pension Plan (CPP) and the Ontario Retirement Pension Plan (ORPP) has skirted this question.

The going assumption – explicit in the ORPP’s numbers; implicit in conversations about “fully funded” CPP expansion – is that assets in these plans will earn 4 per cent annually…

Last week’s announcement that former Pan Am Games chief Saad Rafi will run the proposed Ontario Retirement Pension Plan makes it sound ready to go. It is not. Until Ontarians get some basic information about how the scheme is supposed to work, the ORPP is more notion than actual plan.

The provincial government has released some specs. The contribution rate: Employers and employees together will put in 3.8 per cent of covered earnings. The retirement benefit: about 15 per cent of covered earnings. The Conference Board of Canada has released a cost-benefit report paid for by the Ontario Ministry of Finance. And the government has committed, again, to launching on Jan. 1, 2017.

Notwithstanding these announcements –…