The Investment Funds Institute of Canada (IFIC) is urging the federal government to tweak the rules that govern existing retirement savings vehicles to facilitate behavioural “nudges” in order to enhance retirement savings, rather than creating a supplement to the Canada Pension plan (CPP).

In response to the government’s consultation on the creation of a voluntary pension plan, IFIC’s submission argues that Ottawa should look for ways to enhance existing voluntary programs, such as RRSPs and TFSAs, rather than messing with the CPP.

“We recommend that the government focus its efforts and resources on promoting the many existing programs already available to Canadians, rather than add yet another new program in the form of a voluntary CPP,” the IFIC submission says. “The problem for those at risk of under-saving is not lack of access to voluntary savings opportunities, but rather under-utilization of existing retirement savings channels.”

For example, the submission recommends that the government look for ways to help increase the use of existing defined contribution plans, group RRSPs, and TFSAs, “… by facilitating such proven behavioural techniques as auto­ enrolment and auto-escalation, combined with targeted public awareness campaigns aimed specifically at ‘nudging’ those people most at risk of under-saving for retirement to save more.”

Employers could be encouraged to make greater use of these sorts of plans, the submission suggests, if the rules governing group RRSPs and TFSAs were changed in terms of the requirement to lock the employer contribution, and to permit auto-enrollment.

“The government could also make it mandatory for every employer to provide a retirement savings program with locked-in features, while keeping employer matching contributions voluntary, as they are now, to avoid placing an undue financial burden on smaller employers,” the submission says.

Adding a voluntary component to the CPP “will be complex to set up and costly to administer given the likelihood of a fairly low participation rate and the need to track individual accounts,” the submission maintains. Yet, if the government goes ahead, it suggests that “any beneficial design features built into the CPP supplement should be extended to existing programs like group RRSPs.”

The government’s consultation period closes Sept. 10.