Ruling conservative government propose new pooled pension plan for private sector
November 18, 2011
Federal officials in Canada's ruling conservative government are proposing a new Pooled Registered Pension Plan that aims to provide the roughly 60 percent of private sector workers in the country with retirement savings opportunities. The PRPP will be particularly advantageous for self-employed professionals and employees of small businesses.
Small business owners are the main target of the bill, the Globe and Mail reports, as they will be given the option of offering payroll deductions for employee retirement, but the federal government in Ottawa will not force employers to offer the plan nor contribute toward it.
On Thursday, the Canadian Federation of Independent Business voiced its support for the measure, referring to it as "a new voluntary, low-cost and administratively simple retirement savings mechanism [that] will allow more employers, employees and the self-employed to participate in a pension plan."
"For every one percentage point increase in CPP premiums beyond the current 9.9 per cent rate, it would cost 220,000 person-years of employment and force wages down roughly 2.5 per cent in the long run," explained Dan Kelly, CFIB senior vice president of legislative affairs.
However, labor groups and opponents to the conservative government argue that the expansion or addition of the existing Canada Pension Plan is a more reliable option.
"Instead of taking practical steps to strengthen the guaranteed CPP and (Quebec Pension Plan), the government wants them to roll the dice with even more of their retirement savings," interim New Democratic Party leader Nycole Turmel said Thursday, according to the Calgary Herald. "Why is the out-of-touch prime minister forcing Canadians to play retirement roulette on the tumbling Toronto Stock Exchange?"
While Canada is still feeling the effects of the global economic recession, its emergence has been stronger than that of its neighbors to the south or across the Atlantic. The CFIB reported earlier this month that small business confidence climbed to 63.6 in October - up from 62.7 the month before. What's more, unlike the seemingly insurmountable debt crises in the U.S. and Europe, Canada is set to balance its own deficit within a few years.
"Regardless, more business owners are saying their recent performance has been better than at any time since the recession began," said CFIB vice president and chief economist Ted Mallett.