Professional Documents
Culture Documents
ca
http://umanitoba.ca/outreach/evidencenetwork/archives/10802
To illustrate more clearly, a worker earning exactly the YMPE would contribute $843 a year (matched by the employer) and would be eligible for a pension of $14, 564 per year (indexed) starting at age 75 and going for life (and guaranteed for at least five years). For workers in a Defined Contribution or RRSP world, this proposal has huge potential. Instead of being forced to plan your retirement income to cover your unknown life expectancy, you could plan your drawdown much more accurately knowing that at age 75 an extra benefit of $14,564 per annum would kick in. This would be on top of your CPP, OAS, and possibly some GIS benefits. Bottom line: Individuals would only have to provide their own retirement income from the point of retirement to age 75. But not to infinity as is necessary today (that is to some unknown limit defined by your life expectancy). This idea deserves serious consideration by our federal government. It could be enacted tomorrow without any approvals required from the provinces (unlike amending the Canada Pension Plan). And the infrastructure is already there: benefit administration could be assigned to the Canada Pension Plan and the investment of accruing assets to the Canada Pension Plan Investment Board. Quebec has not yet endorsed the proposal. Predictably, it has been opposed by the Canadian Federation of Independent Business because their members do not want new expenses of $843 (per employee) a year. And you can expect opposition from the financial institutions who profit from your present dependence on their products. That said, it is my sincere hope that Canadians can debate this innovative idea fully and openly. It deserves nothing less than that. Robert L. Brown is an expert advisor with EvidenceNetwork.ca and a Fellow with the Canadian Institute of Actuaries. He was Professor of Actuarial Science at the University of Waterloo for 39 years and a past president of the Canadian Institute of Actuaries.