Canadian workers are on the brink of financial disaster when they retire, Premier Kathleen Wynne warned in Calgary Friday as she continued a push for an enhanced Canada Pension Plan.
The decline of employer-sponsored pension plans and low investment returns have left the country “on the precipice of a retirement income crisis,” the premier said in a luncheon speech to the Calgary Chamber of Commerce.
“Over the past 30 years, the burden of planning and saving for retirement has shifted to individuals. The savings vehicles we have in place don’t do the job anymore,” added Wynne, who also met with her Alberta counterpart on the issue.
“Premier (Alison) Redford understands a bit better now where we’re coming from. It was a good initial conversation.”
Payouts under the $183-billion CPP are capped at $12,000 annually, well below the poverty line, leaving workers to rely mainly on their own savings and company pension plans — if they have one. About 60 per cent of Canadians don’t.
With provincial premiers preparing for their next Council of the Federation meeting in mid-November, Wynne is trying to get their support to pressure the federal government into boosting employer and employee contributions to the CPP, paving the way larger payouts to retirees.
She has served notice that Ontario will consider starting a provincial pension plan — an idea floated by NDP Leader Andrea Horwath in 2010 — if federal Finance Minister Jim Flaherty doesn’t make changes to the CPP.
“I am determined to address this problem . . . one way or another,” said Wynne, who has not revealed how much her government might expect workers and their employers to contribute to an Ontario pension scheme.
“Most Canadians only dream about maxing on their RRSP contributions, if they can make any contributions at all . . . more than half of young Canadians — those under the age of 42 — will make less than 80 per cent of their current income when they retire.”
Critics have dismissed Wynne’s musings about an Ontario pension plan as political posturing at a time when such a plan would be a hard sell given the drubbing her government has taken for spending $1.1 billion to cancel power plants in Mississauga and Oakville before the 2011 election.
Flaherty has warned the economy is in a fragile state, making it difficult for Ottawa to force companies and their workers to increase their CPP contribution levels.
Employers must now match the 4.95 per cent of pay employees contribute to the plan. The employee contributions max out at $2,356 this year.
In Ontario, the Progressive Conservatives and the Canadian Federation of Independent Business have also argued against higher public pension plan contributions at this time.
(By Rob Ferguson)