In this commentary, AIMS Senior Fellow Brian Lee Crowley discusses Finance Minister Jim Flaherty’s decision to scrap the proposal to extend the Canada Pension Plan and instead work with the private sector to explore retirement options for Canadians. After the recent recession, many people are concerned that their retirement savings have been affected. Crowley questions whether this is reflective of a problem with our pension services, or simply a bit of stress put on pensions and other areas in Canada.
Upon looking at other pension systems around the world, Only two major OECD countries, France and Germany, have pension systems that give their average retiree a higher percentage of average pre-retirement disposable income than Canada does. Poverty among Canadian seniors is among the lowest in the OECD, so our retirement system is not failing the least well off. There is evidence that some people in the middle-income range are not saving enough to generate the 60% to 70% of pre-retirement income generally considered suitable for a comfortable post-work life. But we don’t know a great deal about these people or their circumstances.
In Is the piggybank broken? – We don’t really know, Crowley explores options to solving the narrow problem identified. If more forced saving were the solution, you’d expect Canadians who participate in registered pension plans to have higher retirement incomes than those who do not. They do not. It is possible there is a minority that is not being well-served by this otherwise robust system, Crowley notes, but we don’t even know yet if that is the case. Let’s find out before making ill-informed reforms to a system that has served Canadians well.
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