SAINT JOHN–The Canada Pension Plan is failing Canadians, and a complete overhaul is needed if Canadians are to enjoy higher rates of economic growth and secure retirement incomes, according to Brian Lee Crowley, President of the Atlantic Institute for Market Studies (AlMS).
Crowley proposed a new framework for the Canadian pension system. Just as Canadians now manage their own RRSPs, they should be allowed to manage their contributions to a new mandatory pension plan which would replace the current system, he said.
“We have abandoned a reliance on a farsighted private sector-based economic decision making system in favour of a myopic public-sector based one,” Crowley said in an address to the Atlantic Chapter of the Canadian Pension Benefits Conference.
Crowley said that under his plan Canadians could choose to have their contributions managed by private funds instead of by government. The proposal would create large privately-managed pools of capital which would seek the most productive returns possible, and that would spur economic growth and benefit Canadians in the pension plan, he said.
Presently, instead of becoming an engine of economic investment and growth, a large portion of CPP funds are turned over to the provinces at favourable rates to finance current spending, he noted.
As well, Canadians have reason to be concerned about whether the CPP will be able to meet its obligations, he warned. Contributions were kept low for too long, while benefits were increased with little regard for their affordability, placing great strain on current and future generations of contributors. The plan’s unfunded liability stands at well over $500 billion.
“We have in many ways fallen for the charms of the siren song of high sounding principles with little grounding in reality,” said Crowley in reflecting on the first thirty years’ operation of the Canada Pension Plan.
Crowley argued that his reform would meet three key objectives: 1) return responsibility for retirement planning to individual Canadians; 2) encourage saving and the stimulation of economic growth; 3) ensure that the retirement needs of low income Canadians are adequately met.
For more information, contact:
Brian Lee Crowley, President, AIMS, 902-429-1143