Jonathan Chevreau, Financial Post · Jul. 6, 2011 | Last Updated: Jul. 6, 2011 9:57 AM ET
Even though a “Big CPP ” was championed by losing parties in the recent election, the idea of almost doubling benefits paid out by the Canada Pension Plan refuses to die.
If a new and mandatory national defined benefit [DB] pension plan proposed by retired Finance Department mandarin Keith Horner gets traction, CPP and QPP benefits would jump from 25% to 40% of earnings up to $48,300 and from zero to 25% on a bigger salary base of $96,600.
In a 40-page paper published Tuesday by the Institute for Research on Public Policy, Mr. Horner makes the case for something just short of the Big CPP championed by the NDP, the Canadian Labour Congress and the Liberals in the election won by the Conservatives.
They felt building on the CPP was the best way to make up for the gradual loss of old-fashioned DB pensions being phased out by private-sector employers. The need is certainly there: Canadians haven’t saved enough to make up the difference. Mr. Horner says 28% of modest-income earners ($25,000 to $60,000 per year) and 29% of middleincome earners ($60,000 to $100,000 per year) aren’t saving enough to replace 90% of their working incomes.