A motion brought forward by Victoria MP Murray Rankin to expand the Canadian Pension Plan was shot down in the House of Commons Monday afternoon.
The motion, which called on the government to “commit to supporting an immediate phase-in of increases to basic public pension benefits,” was introduced in advance of a Dec. 16 federal-provincial-territorial finance ministers’ meeting in Quebec.
“We lost, but we did manage to get the Liberals to come onboard our motion,” Rankin said in an interview.
The NDP is promoting CPP reform as the best solution to a growing number of Canadians who are failing to adequately save for retirement. The federal Conservatives, in their rejection of CPP expansion, argue a voluntary retirement savings model is more palatable to cash-strapped Canadians and businesses during an economic downturn.
“There are a lot of people who agree with me from the Conservative side,” Rankin said. “The minister of finance (Jim Flaherty) said until 2011 he wanted to increase the CPP.”
CPP relies on annual contributions from both an employee and employer, to a maximum of about $2,350 each, which is then invested and used to pay Canadians one-quarter of an average salary upon retirement.
A stark decrease in voluntary RRSP contributions amongst Canadians in recent years is spurring the debate for CPP reform. Three out of four working Canadians failed to contribute anything into their RRSPs in 2010, and there is currently $633 billion in unused RRSP contribution room across the country.
StatsCan numbers also show the robust success of the CPP, whose investments grew by 13.7 per cent in 2012, while RRSP plans grew by 8 per cent in the same period.
So far, the federal Conservatives haven’t been convinced that CPP reform is the best solution. Chungsen Leung, parliamentary secretary for multiculturalism, said in a lengthy speech during debate that take-home pay should be kept in the pockets of workers and not divvied up for future payouts.
“You could say there is a certain attractiveness to expanding the Canada Pension Plan … but it always comes down to this: How do you pay for it,” said John Baird, foreign affairs minister. “It’s not an issue whether it’s a payroll tax or contribution, (Canadians) don’t have any more cash to put out.”
The opposition parties, as well as provincial governments in PEI and Ontario, still hope to convince the federal government to phase in the doubling of CPP benefits to address the growing crisis of inadequate retirement planning.
“People cannot afford to save for their retirement. We have the biggest household debt load in the history of Canada,” Rankin said.
“We need to sometimes do some repairs to the social safety net and this is very much a part of that exercise. I’m disturbed the government thinks we can get by with voluntary contributions, which a lot of Canadians will not use.”