CD Howe Institute criticize feds Pooled Registered Pension Plans | National Union of Public and General Employees

CD Howe Institute criticize feds Pooled Registered Pension Plans

Program will not benefit majority of Canadians preparing for retirement.

Ottawa (27 Aug. 2012) — Even the CD Howe Institute is now criticizing the Harper governments' proposed Pooled Registered Pension Plans (PRPPs) program.

In the report, “Pooled Registered Pension Plans: Pension Savior — or a New Tax on the Poor?”, authors James Pierlot and Alexandre Laurin find that the PRPPs program will do little to help most Canadians prepare for retirement.

“As currently proposed, PRPPs present only the appearance of reform because they are for the most part a re-release of an existing retirement savings vehicle — RRSPs — with a new coat of paint,” said James Pierlot, a pension specialist and member of the Pension Policy Council of the C.D. Howe Institute.

Criticism of PRPPs is familiar to the National Union of Public and General Employees (NUPGE).  While the CD Howe suggests minor revisions to the proposal, NUPGE suggests scrapping the plan and looking for improvements to the Canada Pension Plan (CPP).

Larry Brown, Secretary-Treasurer of NUPGE, said that PRPPs "will provide little benefit to the 60 per cent of Canadian workers without a pension plan but will provide a new source of profit for the financial industry.”

What is to be established is a national defined contribution plan available to all workers and administered by the financial services industry. The plan allows employees to opt out and will not require employers to contribute. Provincial enabling legislation will also need to be introduced to make the plan fully operational.

"We already have a very expensive voluntary program in Canada – Registered Retirement Savings Plans (RRSPs) –which cost $18 billion a year in tax subsidies, more than half of what the federal government spends on Old Age Security and the Guaranteed Income Supplement. Only 30 per cent of Canadians contribute to RRSPs and 89 per cent of contributions come from the highest earning 11 per cent of tax filers,” said Brown.

“Meanwhile, the RRSPs program has been a bonanza for the financial industry, charging an average administration fee of 2.5 per cent, the highest of 22 countries.”

Brown points out that PRPPs fails to match the clear and demonstrable benefits of CPP expansion.

“As a mechanism for addressing the deficiencies in Canada’s retirement income system, PRPPs will not have the same impact on total retirement savings, and the cost to individual contributors will be far higher. PRPPs will not provide a secure retirement income at a set replacement rate of pre-retirement earnings. Benefits will be entirely determined by uncertain investment returns.”

More information:

Pension Breakdown: How the finance ministers bungled pension reform 


The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE