Does a mandatory CPP increase double an employee’s return or risk job losses?
OTTAWA — For now, the Conservatives are merely floating the idea. Still, the finance minister’s announcement that the party would consider offering Canadians the option to increase contributions to the Canadian Pension Plan came as a surprise to many.
For one, some critics are saying the move represents a 180 from the party’s stance a mere five years ago.
In 2010, then-finance minister Jim Flaherty, who passed away last year shortly after leaving politics, said the federal government rejected the idea of a voluntary plan. Doing so, he said, would “very much disturb” the pension plan. The better option would be to phase in a mandatory increase, he said at the time.
“Now [the Conservatives] are floating this strange balloon out there,” said New Democrat finance critic Nathan Cullen.
The official Opposition, as well as the Liberals, said they’d expand the CPP with mandatory increases, a plan that’s in line with what some provinces have called for.
Despite what Flaherty may have said, the Conservatives now contend he did not support a mandatory expansion of the pension plan, which is more or less equal to a payroll tax.
“I was Jim Flaherty’s last parliamentary secretary. We had long discussions about this,” said Andrew Saxton, who now fills that role for Finance Minister Joe Oliver.
“I know he was dead set against a mandatory increase because essentially it’s a payroll tax. And a payroll tax kills jobs.”
Pushing a mandatory increase, in short, would result in a vast number of layoffs, Saxton said.
WATCH: NDP finance critic says Canadians could see double their CPP return if the government implements a phased in, mandatory increase.
In its 2011 election platform, the NDP estimated its plan to phase in a mandatory increase could result in as much as double the return at retirement, Cullen said.
“It’s what we’ve heard from experts in the field for years,” Cullen said. “If you want to expand the CPP you have to keep its foundations. The way the CPP works, and the reason it works so well for millions of Canadians, is because you put a buck in and your employer does as well.”
The Conservatives, however, for now remain committed to consulting with Canadians to see what citizens want in terms of options for retirement savings.
“This is one of the options,” Saxton said. “This is one of the tools in the toolbox that we want to give them, in addition to the Tax Free Savings Account, in addition to the Pooled Registered Pension Plan, and we think it’s a good idea to give Canadians a choice on how they want to voluntarily plan for their future.”
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