Enhanced CPP Benefits Under Bill C-36 Reflect Good Times, Erode Safety Margin Against Shocks: C.D. Howe Institute



    TORONTO, March 29 /CNW/ - New legislation before Parliament to enhance
certain benefits under the Canada Pension Plan sends a worrying message for
the proponents of long-term stability in the CPP. According to an e-brief
released today by the C.D. Howe Institute, Bill C-36 embodies the tension
between Plan beneficiaries who typically want richer payouts, and younger
contributors who are concerned about the CPP's sustainability. In the study,
"Will C-36 Undermine CPP '9.9'? Benefit Enhancement and the Sustainability of
the Canada Pension Plan," William B.P. Robson, Institute President and CEO,
points out that the changes would increase the contribution rate required to
maintain stability in the CPP to an estimated 9.79 percent. While 9.79 is
still below the legislated rate of 9.9 percent, the change eats up part of the
margin between the previous steady-state rate and the legislated rate that
good economic times have created. "For the CPP, like any pension plan, lean
years can follow fat ones," he says. Less happy but quite realistic
demographic, economic and cost assumptions could yield a steady-state rate
above 10 percent. Bad breaks on more than one front could push the rate above
11 or even 12 percent, Mr. Robson points out. "The margin that Bill C-36 would
eat into is one that younger Canadians might like to preserve against future
shocks."
    The e-brief is available at: http://www.cdhowe.org/pdf/ebrief_41.pdf.





For further information:

For further information: William B.P. Robson, (416) 865-1904,
cdhowe@cdhowe.org


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