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Financial planning tips

May 07, 2014

Here’s what the pension debate is missing

The upcoming provincial election in Ontario is sure to keep the debate over Canada’s retirement income system front and centre. Good thing, too.

Ontario Premier Kathleen Wynne appears set to make the retirement income system a key talking point in her province’s June 12 election. This is fundamentally a positive development. While I’m not one of those who believe we have a pension crisis in Canada, I am happy to see so much media attention paid to this important issue. We all stand to benefit from more debate about — and eventual progress on — the pension file.

A quick disclaimer first: I am not a spokesperson for my employer on this subject. I just happen to have an opinion and a forum in which to share it. Please consider what follows my personal view.

We’re about to see the debate recast as a public- versus private-sector argument. (You might even say it has already happened.) This will be reminiscent of the U.S. presidential election of 2000, in which then-candidate George Bush argued in favour of replacing Social Security with private savings accounts. Bush’s opponent, Vice-President Al Gore promised to lock the program in for 50-plus years by dedicating its US$2.3 trillion surplus to retirees and the national debt.

Elections have a way of boiling complex policy debates down to either-or decisions.

For all its nuance and considered opinion, we’re seeing the pension question similarly reframed here in Canada: as a choice between bigger government-funded pensions and private sector solutions that leverage workplace savings.

Leaders on the side of a government-driven solution will promote enhancements to the Canada Pension Plan (CPP). Wynne’s Ontario Liberal Party is advocating the creation of an Ontario Retirement Pension Plan on top of the CPP.

Others will argue in favour of bolstering workplace plans, be they defined contribution, defined benefit or the more recently introduced Pooled Registered Pension Plan (Voluntary Retirement Savings Plan in Quebec).

This either-or choice is a false one. Both sets of ideas have merit, and they are not mutually exclusive. I vote for all of the above. 

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