OTTAWA, Dec. 17, 2012 /CNW/ - Today federal and provincial finance
ministers will be meeting at Meech Lake to debate a potential reform of
the Canada/Québec Pension Plan (C/QPP), coming to grips with the fact
that Canadians are not saving enough for retirement and recognizing
that the pooled registered pension plan (PRPP) initiative may need to
Simon Curtis, President of the Canadian Institute of Actuaries, said
today, "Canada's actuaries are acknowledged experts in pension and
retirement savings matters and we support these discussions—pension
reform on government agendas is good for Canadians. We encourage such
conversations and look forward to hearing the results."
In terms of increasing C/QPP benefits, there are solid advantages:
The CPP is a defined benefit plan, and the Canadian Institute of
Actuaries believes these are efficient plans for delivering retirement
income to Canadians;
The C/QPP system's infrastructure already exists;
Payroll deduction and individual adjustments can be made through tax
The investment capabilities of the CPP Investment Board (and the Caisse
de dépôt et placement du Québec) are well known; and
Economies of scale will benefit plan members.
"However, increasing C/QPP benefits is not without its issues," Mr.
Curtis added. "New benefits should be fully funded to avoid
intergenerational inequities and to maintain the sound funding of the
C/QPP. It will take 40 years before the full impact of any new benefits
is felt. Increasing C/QPP benefits, even modestly, is not a short-term
solution. This element needs to be communicated clearly, along with the
need to save more.
"Details on any contemplated reform will not be known until later today.
No doubt the discussions will be arduous. A C/QPP enhancement, if any,
must be carefully designed so that it does not unintentionally lead to
a reduction of Guaranteed Income Supplement payments that many
Canadians rely on. Moreover, as the C/QPP is based on a 'one size fits
all' principle, any expansion should still leave significant room for
private pension plans to accommodate the particular needs of various
"There are many other options that can be explored. We hope governments
will not stop at this reform, but will do more to improve the
legislative and regulatory environment for employer-sponsored defined
benefit pension plans across the country."
The Canadian Institute of Actuaries is the national organization of the
actuarial profession. The Institute is dedicated to serving the public
through the provision, by the profession, of actuarial services and
advice of the highest quality. In fact, the Institute holds the duty of
the profession to the public above the needs of the profession and its
members. Actuaries employ their specialized knowledge of the
mathematics of finance, statistics, and risk theory on problems faced
by pension plans, government regulators, insurance companies (both life
and property/casualty), financial institutions, social programs, and
SOURCE: Canadian Institute of Actuaries
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