Pension reform is for everyone

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The Manitoba government plans to act like the province’s unofficial bird — the mosquito — and pester the country’s other finance ministers while the details are being worked out on expanding the Canada Pension Plan.

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Opinion

Hey there, time traveller!
This article was published 21/06/2016 (2353 days ago), so information in it may no longer be current.

The Manitoba government plans to act like the province’s unofficial bird — the mosquito — and pester the country’s other finance ministers while the details are being worked out on expanding the Canada Pension Plan.

Manitoba, along with Quebec, is a holdout to the agreement in principle that outlines plans to reform CPP, something most Canadians support.

Premier Brian Pallister told reporters there was no assumption the meetings would result in “an iron-clad agreement. So we’re working on negotiating the best possible agreement that we can for the people of Manitoba and, frankly, for the people of Canada right now.”

JOHN WOODS / THE CANADIAN PRESS FILES Manitoba's Finance Minister Cameron Friesen.

Taking a step back to offer a critical eye on this policy direction is warranted because policy is never perfect, particularly policy hammered out so quickly. No one was expecting a deal would be reached Monday. Even the federal finance minister had a deadline of December to finalize the negotiations. Manitoba and Quebec have the opportunity now to be the “second eye” to look at the unintended consequences.

The plan changes the upper earnings limit to $82,700 from the current ceiling of $54,900, in a bid to help middle-income earners prepare for retirement. As well, the new plan is meant to replace a third of income up to the new ceiling, whereas the current CPP plan replaces 25 per cent.

There are some concerns that higher premiums will have an impact on jobs — once phased in, CPP premiums would rise by one per cent for employers and employees. The Winnipeg Chamber of Commerce says the economy is too fragile to support such a change, and there must be a better way for people to pay for their retirement. The Canadian Federation of Independent Business says it will hurt small businesses. But given this will be a phased-in approach over 7½ years beginning in 2019, it may be too early to sound any warnings just yet on the economy front. As the NDP points out, more money in the hands of senior consumers will help business, as well.

Overall, pension reform makes sense, particularly if it’s introduced slowly and it’s aimed at helping lower- and middle-income earners. This seems to be the view of most Canadians. In a recent Angus Reid poll, 58 per cent support modest reform, while 17 per cent want significant changes.

This, however, should not be seen as a panacea for anyone’s retirement woes. It may be a stronger safety net than before, but as in all things, hope shouldn’t play a part in anyone’s plan. In particular, there are still many Canadians who won’t have access to full pension under the CPP because their earnings have been low or because they’ve stepped out of the workforce for a period of time.

That’s the case for many women. Statistics show women live longer and make less money than men, are more likely to be contract or part-time workers and are more likely to take time off work in order to take care of children. That’s a lethal combination for retirement planning, and the end result is senior women are twice as likely as men to live in poverty, particularly if they are single.

If pension reform is to be truly embraced, it needs to address these issues. Hopefully the Pallister government can take up that challenge.

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