Canadian Labour Congress

Canadian Labour Congress

July 21, 2011 12:50 ET

"It's a Lemon": Canadian Labour Congress Says Feds New Pension Scheme a Non-Starter

OTTAWA, ONTARIO--(Marketwire - July 21, 2011) - "Sounds like they're trying to sell us a lemon."

That was Ken Georgetti's reaction to an announcement earlier this week from the federal minister responsible for retirement security on the Conservative government's plans to push ahead with its Pooled Retirement Pension Plan, including a cross-country blitz to promote the scheme, while not being able to offer any details about how the plan will work.

"Minister Menzies says his government's PRPP experiment is the solution to the country's looming retirement income crisis, but can't offer any specifics about how or if it will actually work. What's the point of offering more Canadians access to imaginary or yet-to-be-invented workplace pension plans without any guarantee those plans will deliver improved retirement income security?"

Georgetti says Canadians are unlikely to opt into any workplace pension plan that comes with no guarantee that employers will buy-in, no guarantee that savings will be protected against inflation or future market turmoil, and no guarantee that the management fees charged by private sector brokers won't bleed away future earnings.

Instead of spending precious government resources trying to sell Canadians on a scheme designed by and for the financial services industry, Georgetti says the federal government should just accept all the evidence it has, listen to the pension experts and expand the Canada Pension Plan as soon as possible.

"We've done the research, we've crunched the numbers and the pension experts agree: the best vehicle to help all Canadians save more for retirement is an expanded Canada Pension Plan (CPP)," he says.

According to Georgetti – whose 3.2-million member organization includes unions responsible for 80% of negotiated workplace pension plans in Canada today – the Conservative PRPP scheme puts the interests of the financial services industry first and gives them new ways to go deeper into Canadians pockets. The only guarantee the PRPP comes with is the money private sector brokers will be able to skim off people's savings through management fees. Menzies himself admits he has no idea how much those fees will cost and won't promise they will be lower than what people currently pay (which defeats the whole purpose of a PRPP).

"Every single worker already has an excellent retirement savings plan – the CPP. Letting them save more through that plan by expanding the income it covers makes more sense than running around the country, asking them to buy untested, experimental savings schemes from private brokers."

The Canadian Labour Congress continues to advocate for a phased-in doubling of CPP benefits as the best solution to Canada's retirement income crisis. Details of the CLC plan can be found at www.canadianlabour.ca/action-center/retirement-security-for-everyone.

The Canadian Labour Congress, the national voice of the labour movement, represents 3.2 million Canadian workers. The CLC brings together Canada's national and international unions along with the provincial and territorial federations of labour and 130 district labour councils. Web site: www.canadianlabour.ca

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