The public option is the best option to secure retirement savings

OTTAWA – New Democrats welcome the province of B.C. to the pension debate and its support for building on what we believe is the most secure, stable, least costly option for the retirement savings of Canadians – the Canada Pension Plan/Quebec Pension Plan, says New Democrat Pensions Critic Wayne Marston.

“New Democrats believe Canadians should no longer be prevented from contributing as much as they choose to the best retirement savings vehicle available, the CPP/QPP, simply to keep the financial industry friends of the Liberals, Conservatives and their advisers in business,” said Marston.

On Thursday, B.C. Finance Minister Colin Hansen released a pension-review document which states that measures to enhance the CPP are “the most promising options.”

“We agree that the CPP is the vehicle we should be using to help address the pensions crisis sweeping the country,” said Marston. “The evidence is clear: the best response is to expand the CPP/QPP for the 93% of Canadians who are already members. It’s a national pan-Canadian vehicle, already in place, portable, risk-free, indexed, publicly and cheaply administered, with predictable defined benefits. No other plan provides the same advantages at so little cost.”

In October, New Democrats called for phasing in a doubling of CPP/QPP benefits, to increase the maximum monthly benefit from $908.75/mo. to $1,817.50/mo., Doing so would require an additional payroll deduction of about 2.5% - less than the annual administration fees on many RRSPs. Doubling the CPP/QPP would, when combined with the current Old Age Security benefit, give Canadians a public retirement security system that would guarantee up to 63% replacement of pre-retirement income, compared to the present 38%.

New Democrats are also calling for the addition of a voluntary “tier” to CPP/QPP, in addition to doubling the basic benefit. This would allow Canadians to contribute as much as they choose to increase their CPP, with the contributions managed by the CPP Investment Board at the same low administration cost (and not by the high-cost financial industry) in return for an additional defined benefit.