Op-Eds
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 –…
By Yves Trudel
The experience of the Quebec Pension Plan – Canada Pension Plan’s equivalent for the province – holds cautionary lessons for the country’s new pension options, such as the pending Ontario Retirement Pension Plan (ORPP) or proposed CPP enhancements. Without proper independent governance and rate-setting mechanisms, risks are great that the ORPP or an enhanced CPP will end up improperly funded, leading once again to more intergenerational transfers of wealth.
A recent C.D. Howe Institute report shows that the QPP’s contribution rate was set too low from the beginning, despite the advice of experts and actuaries. As the plan matured, multiple reports pointed to imminent needs for…
Published in the Financial Post on June 4, 2015
By Malcolm Hamilton
Malcolm Hamilton is a senior fellow at the C.D. Howe Institute and a former partner with Mercer. His paper, Do Canadians Save Too Little?, is published by the Institute.
Canadians frequently read that they borrow too much, spend too much, save too little, retire too early and live too long. The drumbeat intensifies during RRSP season but it is always there in the background, and has been for decades. I cannot remember a time when Canadians were thought to be saving enough.
Our undersaving problem is attributed to many things: financial illiteracy, personal irresponsibility, a lack of foresight and insufficient self-control, to name…
Published in the Globe & Mail on November 12, 2013
By William Robson
Chronically low investment returns on inadequate saving are making more Canadians worry about retirement. Fair enough – but the bigger Canada Pension Plan many unions and provinces are pushing is a bad response. Durable pension improvements for people currently working must rest on more saving by those same people. Instead, “Big CPP” threatens another wealth grab at the expense of the young.
Advocates for a CPP that covers earnings up to a higher cap or replaces more of those earnings stress that the CPP is mandatory, has low investment costs and offers defined benefits. They typically play down how a bigger CPP would take more from…
