CPP Increase: A Solution To Nothing
Despite initial opposition from the provinces, it seems that Justin Trudeau’s pledge to bring in “Big CPP” will indeed become a reality. Larger monthly Canada Pension Plan payments for seniors will be coming our way shortly, along with larger monthly contributions from both ordinary workers and their employers. Ontario premier Kathleen Wynne, no doubt eager to discuss anything other than the fact her approval ratings had suck to a ghastly eighteen percent, wasted no time in dashing before the nearest news cameras to announce how delighted she was by this hard fought victory she and her party had championed for so long. In a near miracle, Trudeau himself actually looked almost dignified by comparison, but he too lauded this as a victory for workers’ futures and their financial security.
Of course, this is all sheer an utter poppycock of the highest order. From the very beginning of this debate on expanding the existing federal pension program the dialogue was fraught with misconceptions and plain old fashioned lies. The most foremost of course is the idea that Canada somehow faces a retirement crisis that the imperiled workers of today must be saved from. Thanks to our existing CPP, combined with the supplementary Old Aged Security and Guaranteed Income Supplement programs, Canada has one of the lowest levels of seniors living destitute in the Western world. The existing social safety net already creates a near rock-solid basement for retirement income that is firmly above the poverty line, so the idea that an expanded CPP benefit is needed to save the next generation of the elderly from a fate of scavenging dumpsters and sleeping rough on park benches is absurd to say the least.
Some future seniors, indeed many if we are honest, who lived beyond their means throughout all of their working lives may very well face a reducing in their disposable incomes and standards and living in retirement due to insufficient savings. That is a very different situation, however, than the disingenuous fantasy being put forward by the advocates of an expanded CPP who argue that it is meant to ward off a future of the elderly being consigned to the poor house. There is such a thing as personal responsibility, and while society does have a duty to keep the old and infirm from poverty in their old age it most certainly does not have an obligation to finance the high living retirement dream of biannual trips around the world and winter homes in Florida that far too many of us have come to feel we are entitled to. Moreover, this is an example of the worst instincts of nanny-state liberalism; the idea that the government always knows better than the people and that ordinary folks must be compelled to do what is best for them regardless of their actual wishes. Not putting twenty percent of your income away for retirement? No worries, the government is here to make you!
Equally absurd is the idea that this expanded benefit will actually lead to a more prosperous retirement for a great many Canadians. A report by the CD Howe Institute, from which none other than Finance Minister Bill Morneau hailed from before he underwent an apparently radical personality transplant and joined Trudeau’s Liberals, observed rather accurately that if you do not have the means to save today, then the government demanding a bigger CPP contribution off of your pay cheque will not magically lead to you making more money. Instead those living pay cheque to pay cheque will simply have to tighten their belts ever so more as they try to get by, while those who do have the means to save will simply decrease the funds they already put away towards existing RRSPs and TFSAs and other savings vehicles.
This, of course, draws attention to the fact that as a long-term savings plan CPP has some very serious drawbacks when compared to other options already available to Canadians. Should I die tomorrow, any funds currently held in my private savings go towards my family whereas money that I’ve contributed towards the Canada Pension Plan simply disappears into the ether that is the government’s coffers. Private savings can also be put towards purposes other than retirement that are equally important to most Canadians, whether this is a down payment on a home, paying for a child’s education, or simply covering expenses in the event of job loss or a leave of absence due to injury. Should I become unemployed tomorrow, the money I currently hold in my Tax Free Savings Account can be used to pay for my rent and put food on the table until I am able to find new employment for myself whereas I have no such option to draw upon the money I have contributed towards CPP.
Big CPP is quite simply an unnecessary solution to a problem that does not exist. The decision of the forge ahead regardless of this reality is one that will leave future Canadians with a future retirement that is no more secure than it is already, and a present that will have less take home pay and fewer job prospectus as employers doubtlessly reduce hiring to compensate for the increased costs that will accompany the Canada Pension Plan expansion. Far from a hard fought victory, this is instead a self-inflicted wound that will haunt us for many years to come.