Cue the CPP counterarguments
When the provinces and the federal government announced they had reached a deal to expand the Canada Pension Plan, I knew there would be corporate pushback.
And it didn’t take long in coming.
Perrin Beatty, president of the Canadian Chamber of Commerce, was out of the gate pretty darned quickly.
“The announced agreement to expand the CPP will basically be a form of payroll tax which, when it is in full force, will put further financial strain on Canada’s already struggling businesses and on the middle class,” Beatty said.
Blah, blah, blah — shut your cake hole. (That the complaint is coming from Beatty, of course, is unintentionally hilarious. He was elected to the House of Commons at 22 years of age, defeated at 43, and now can draw a pension of $70,000 a year for his entire life. He probably won’t be needing CPP support, especially because, as Daphne Jennings of the Reform Party pointed out in 1994, “Beatty will collect more than $5 million in pension payments if he lives till 75.” At 60, his yearly take will even be increased to offset inflation. Ho, ho, ho.)
But get away from the individual personalities, because Beatty’s not the only one complaining — here’s the Canadian Federation for Independent Business president Dan Kelly, talking to the Globe and Mail: “It is tremendously disappointing to see that finance ministers are putting Canadian wages, hours and jobs in jeopardy and wilfully moving to make an already shaky economy even worse.”
The proposed change, of course, is a whopping one per cent premium increase, phased in over five years, meaning a worker earning $50,000 will pay $25 a month more in premiums. Employers would do the same.
The changes also mean that, some time in the future, newly retired workers would end up getting a few thousand dollars more a year.
But back to the shutting of cake-holes.
If the CPP is changing to make it possible for retirees to have a little more money every month, good. One of the reasons they need it is because businesses in this country have spent the last two decades weaseling out of their involvement in workers’ retirement savings to improve corporate bottom lines.
Fewer and fewer companies are involved in retirement plans for their employees — those that do have plans, spend much of their time moving to defined contribution plans to limit the companies’ own financial liabilities. That means the companies pay money into retirement funds directed by their employees, employees who often have little or no knowledge of their retirement funds and investment risk, and who, upon retirement, get out whatever’s left after the latest market shift, wiggle or collapse.
Those same employees are supposed to take their own savings and plow them into regis- tered retirement plans. Some do all right — others don’t. The main winners, of course, are fund managers and their neverending fees.
The new CPP, like the old CPP, may be a defined benefit pension fund, albeit a small pension. For employers, though, it works like the defined contributions they love so very much: their exposure is limited to putting money in, not making sure that anyone actually gets paid. Simply put, business decisions helped dig the hole that many retirees are facing — and would face even more without CPP changes.
People have to live, even if they don’t have a gold-plated taxpayer-funded pension.