Canada’s governments should act now to reform the Canada Pension Plan, says the Canadian Institute of Actuaries.
Federal and provincial governments have a “once-in-a-generation opportunity to ensure Canada’s retirement system meets the needs of current and future retirees,” says Rob Stapleford, president of the actuaries’ institute.
“The pension stars have aligned for Prime Minister Trudeau—his political capital is high, provincial good will is strong, and federal leadership is needed,” he adds. “What’s more, the Minister of Finance is a pension expert. This is as good as it gets.”
The actuaries say the federal and provincial governments should expand the CPP and provincial plans modestly, and institute a voluntary CPP supplement for people who want to contribute more to the public plan.
The Canadian retirement system is at a crossroads due to a convergence of forces, as people live longer, interest rates are low and equity markets are volatile, say the actuaries. Further, new types of pensions such as shared risk/jointly-sponsored and target benefit plans, and a shift by many private defined benefit plans to a defined contribution model, are changing what it means to have a pension.
The private plans should be reformed so that defined-benefit plans can be more sustainable, the actuaries add.
Canadians face a piecemeal and disjointed approach to pension plans, which, if unchanged, will lead to an unduly confusing and burdensome rearrangement of the Canadian pension system, and ultimately, an inefficient outcome, the actuaries say.
For the Canadian Institute of Actuaries’ full recommendations, click here.