A recent study from the Fraser Institute claims boosting premiums to pay for higher Canada Pension Plan benefits would not work, since individuals would simply save less in RRSPs and other individual savings vehicles. Thus there would be no overall increase in retirement income, and individuals would have less flexible access to their savings because CPP contributions are effectively locked in.
The Oct. 19 Globe and Mail editorial supporting expansion of the Canada Pension Plan (CPP) got it exactly right. The CPP is “one of the country’s great public policy successes” and “the best [savings plan] we’ve got.”
Notwithstanding evidence that many middle-income earners will face a sharp decline in living standards in retirement as a result of the erosion of employer pension plans and very low rates of private savings, the Harper government has refused to endorse the emerging provincial government consensus in favour of CPP expansion. The main argument against seems to be that the required increase in contributions (about 3 per cent of earnings) would amount to a damaging tax increase.