LETTER TO THE GOVERNMENT OF ONTARIO:
Dear Honourable Premier and Honourable Minister:
Re: Canada Pension Plan vs. Pooled Registered Retirement Pension Plans (“PRPPs”)
We write in regard to your government’s call for submissions about PRPPs.
PRPPs are products supported by the financial services industry. Essentially, they would be much like group RRSPs – relatively expensive savings arrangements that will do more to enhance the profitability of banks and insurance companies than to solve Ontario’s looming retirement income crisis. The financial services sector already has many high fee arrangements in the mutual funds and RRSP areas, and we hardly need another one. We know that the financial services companies promise that PRPPs, unlike all of the products that have preceded them, will be ‘low cost’. Given the history of this sector, this is not a promise to be taken seriously. Canada remains one of the highest cost countries in the world for financial services.
Canada does face a retirement crisis. The prospects for middle class retirements are fading quickly for Canadians. Professor Wolfson has looked into our retirement futures, based on our current savings patterns, and predicts a doubling of those who will fall short of middle class retirements in the coming years.
This crisis can be addressed, but it must be addressed quickly, since saving for retirement is a long and disciplined process. And it must be addressed in the interests of Canadians, not in the interests of the financial services sector.
This means, as your Government has recognized, that the Canada Pension Plan must be improved. It does not mean PRPPs pay. It would be entirely wrongheaded to introduce PRPP legislation in the absence of meaningful CPP reform – this will simply distract us from the task at hand. With PRPPs, we will spend endless resources regulating too high fees in a too expensive system that will cover too few people with too little savings. This is a waste. If there is any place for PRPPs, it is as an option, in a free market, above and beyond a decent retirement income for all, for those who want to save more and are prepared the fees for doing so. But PRPPs are not the first line of defence for middle class retirements – that is the CPP, and it needs all our attention at this time.
Under these circumstances, we urge your Government to set aside any consideration of PRPPs until CPP reform is implemented. We cannot afford distractions or waste. It is time for pension reform for Canadians, not pension reform for banks and insurance companies.
Yours truly,
ONTARIO FEDERATION OF LABOUR
SID RYAN
President
Ontario Federation of Labour
