The federal government is looking at increasing CPP contributions to prop up a middle class that's heavily in debt and has diminished buying power, Liberal MP Steve MacKinnon says.
Finance Minister Bill Morneau is set to meet with his provincial and territorial counterparts on Monday in Vancouver, where beefing up the Canada Pension Plan will be a focus of the talks. The Liberals promised during last fall's election campaign to enhance CPP. The party cited a CIBC estimate that the average 35-year-old saves for retirement less than half the amount their parents did. The maximum monthly payout for CPP is $1,065 but the average payout is $618.
"We were very clear in the election campaign that we were going to improve Canada's pension system and we were very clear that all of our decisions are going to be those that favour the middle-class," MacKinnon told Bob Fife, host of CTV's Question Period.
The situation in Canada right now isn't healthy, he added.
"Household debt is extremely high, purchasing power is eroding somewhat, and decisions made by this government ... are going to be very important to secure not only Canadians' standard of living right now but right into the future," MacKinnon said.
Conservative finance critic Lisa Raitt said the Liberals should consult with Canadians, particularly millennials who might have a different approach to saving.
"Why should we mandatorily take their money away from them without hearing from them as to what they would rather see?" Raitt said.
New financial technologies could drastically change how young people manage their money, she added.
"I'll tell you one thing I do know about millennials. They are not impressed with having their money locked away so that they can't possibly get at it, and that will be a big concern for people because people have different priorities throughout their lifetime."
Raitt has previously raised concerns about the increased cost to Canadians and to small businesses if the federal government raises the amount they're forced to pay in to the public pension.
NDP finance critic Guy Caron says the argument CPP is harmful to small businesses has been around since it was first introduced, but that it actually helps businesses because seniors have more disposable income due to having the pension. Registered retirement savings plans and tax-free savings accounts are good investment vehicles, Caron said, but few put money into their RRSPs regularly, and few Canadians use TFSAs.
"CPP ... is evidently the least costly to administer and is actually going to ensure retirement security. It's actually the pillar that will ensure retirement security and avoid the pension crisis in the future," he said.
The Canadian Press reported Friday that a briefing book prepared for Morneau when he became finance minister last fall advised Canadian contributions to public pensions are much lower than those of other rich countries, even though private pensions are decreasing. The report said private-sector pension coverage fell from 31 per cent to 24 per cent between 1991 and 2013.
Morneau, who was then the executive chair of human resources consulting supplier Morneau Shepell, event in 2013 that elderly poverty was not a problem. But he acknowledged those with fewer assets could have a problem.
"A modest CPP increase and/or the introduction of PRPPs [Pooled Registered Pension Plans] ... appear to be the likely solutions," he said, according to a copy of his prepared remarks.
A year and a half later, Morneau of increasing numbers of seniors working and said Canadians earning between $50,000 and $100,000 a year were having a harder time saving.
"Given the anxiety in the population, the changing labour force dynamics, and the prospect of increased future retirement challenges, it seems almost certain that dealing with the savings gap will be an issue that government will take on, one way or another," he said.
Changing the CPP requires the support of seven out of 10 provinces holding two-thirds of the Canadian population. Ontario Premier Kathleen Wynne had started moving on an Ontario Retirement Pension Plan, but put it on hold following the federal Liberal election win, and has suggested she may not follow through with the plan at all if CPP is enhanced.
