Various financial services industry and professional associations are pleased with the federal government’s agreement in principle with most provinces to expand the Canada Pension Plan (CPP). But some caution that the program enhancements should be more specifically aimed at those most in need of help in saving for retirement.
Below are reactions from some professional and financial services industry groups:
> Canadian Institute of Actuaries (CIA)
The Ottawa-based organization called the agreement in principle “a significant achievement” that agrees with the CIA’s position that any expansion should still leave sufficient responsibility to Canadians.
Said Robert Stapleford, president of the CIA, in a statement: “We would have preferred, however, an approach more targeted to the needs of middle-income earners and details on how the system will be phased in to avoid intergenerational inequity.”
The CIA’s full announcement can be found here.
> Financial Executives International Canada (FEI Canada)
The Toronto-based professional association for senior financial executives “applauds” the CPP expansion proposal and agrees with the decision of the ministers of finance to raise premiums “moderately over time,” according to a statement.
FEI Canada also called the plan good news for mid-career and younger Canadians, especially those without access to a defined-benefit pension plan, and a preferred alternative to Ontario’s project to create its own public pension plan.
The association’s full announcement can be found here.
> Canadian Life and Health Insurance Association (CLHIA)
“While we look forward to more details, we are pleased that the federal and provincial governments have committed to a modest increase in CPP,” said Frank Swedlove, president and CEO of the Toronto-based CLHIA, in a statement. “However, we continue to believe any CPP enhancement should be targeted to those sectors of the population that need to increase their savings for retirement, and that they will be available to all Canadians no matter where they work or live.”
The CLHIA’s full statement can be found here.
> Investment Funds Institute of Canada (IFIC)
Toronto-based IFIC’s statement commended the ministers of finance for their commitment to building on Canada’s retirement system. It noted the Canadian mutual funds industry’s support of a modest expansion to CPP as one part of an effort to strengthen the retirement system.
> Investment Industry Association of Canada (IIAC)
Toronto-based IFIC’s statement commended the ministers of finance for their commitment to building on Canada’s retirement system. It noted the Canadian mutual funds industry’s support of a modest expansion to CPP as one part of an effort to strengthen the retirement system.
> Investment Industry Association of Canada (IIAC)
“This decision will avoid a patchwork of provincial solutions, like the [Ontario Retirement Pension Plan (ORPP)], that would require significant up-front costs; treat Canadians differently across the regions; limit pension portability; and result in less efficient and more costly solutions to the narrowly identified savings problem,” stated Toronto-based IIAC’s announcement.
> Portfolio Management Association of Canada (PMAC)
The Toronto-based PMAC agrees with the modest increase in contributions and the gradual phase-in period, which begins in 2019.
“Although we had hoped for a more targeted solution focused on those who are at risk of under-saving, we are pleased the agreement addresses many of the gaps in Canadians’ retirement savings,” said Katie Walmsley, president of the Toronto-based association, in a statement.
> Toronto Financial Services Alliance (TFSA)
“While we would have preferred a more targeted approach, we are pleased that both the federal and provincial governments have agreed to an enhancement of the CPP that will be easy to administer and will improve retirement income security for Canadians,” said Janet Ecker, CEO of the TFSA, in statement.
The TFSA’s full announcement can be found here.
CLHIA, IFIC, IIAC, PMAC and TFSA are a part of a coalition of organizations in the financial services industry that have recommended to the finance ministers a national and targeted approach to tackling the issue of insufficient retirement savings. This approach would include greater support for Canadians who live below the poverty level, a small increase in contributions to the CPP and Quebec Pension Plan for Canadians with modest incomes, and encouraging and facilitating retirement savings in the workplace.
> Canadian Federation of Independent Business (CFIB)
The Toronto-based group had the harshest reaction to the news. It called the planned expansion an additional “tax” for Canadians and a “devastating move for Canadian workers and the economy in general.”
The CFIB did identify one “positive” consequence: “That the ORPP — the CPP’s far uglier cousin — won’t come to fruition,” said Dan Kelly, president of the CFIB, in a statement. “It’s a shame that Ontario spent millions of dollars to effectively bully the smaller provinces to force their pension agenda.”
Ontario Premier Kathleen Wynne stated on Tuesday that the province would not proceed with its own proposed public pension plan in the wake of the agreement between the federal government and most provinces.
The CFIB’s full announcement can be found here.