More work required to meet needs of generations of Canadians
TORONTO, June 21, 2016 /CNW/ - A deal for modest CPP expansion reached by Canada's finance ministers still falls short of the needs of generations of Canadians, the United Steelworkers (USW) says.
"The labour movement, with widespread public support, has been advocating for many years for doubling CPP benefits to meet the very real needs of generations of Canadians for a decent retirement," said USW National Director Ken Neumann.
"We welcome the recognition by Canada's finance ministers of the need to improve our universal, public pension system as the most-efficient way to ensure retirement security for all Canadians," Neumann said.
"The ministers are to be congratulated for their willingness to tackle this vital issue. However, their modest expansion of the CPP will not provide the security needed by most Canadians, particularly middle-income earners who are at the greatest risk of pension problems when they retire," he added.
"In fact, even the modest increases in CPP benefits projected under this deal won't take full effect for another 10 years. The prospect of doubling CPP benefits to meet the real needs of Canadians appears to have been abandoned, at least for the next several generations of working people."
Currently, the CPP provides pension benefits equal to 25% of a worker's pre-retirement earnings, but only up to a maximum of $1,092 per month. However, most retired Canadians receive much less than the maximum CPP benefit – only $618 a month on average.
The new CPP deal will expand pension benefits to 33% of pre-retirement earnings, though the increase will be phased in, beginning in 2019 and not taking full effect until 2026.
"This modest increase means that the outlook remains difficult for 11 million Canadian workers, particularly younger generations, who don't have a workplace pension plan," said Neumann.
"It means that, for generations to come, Canada will continue to lag behind most other OECD countries, which invest much more in their public pension systems. Even the United States provides much greater public pension benefits – up to 50% more – than the maximum benefits provided to Canadian pensioners."
The new CPP also falls short of the modest pension benefits that were promised to millions of Ontario workers under the province's now-abandoned Ontario Retirement Pension Plan (ORPP), Neumann pointed out. The ORPP promised a 15% increase in retirement benefits, compared to the 8% increase under the CPP deal.
"While our federal and provincial leaders can be congratulated for taking a modest first step, a greater, long-term commitment for substantive expansion of the CPP is needed to ensure basic retirement security for all Canadians," Neumann said.
SOURCE United Steelworkers (USW)
For further information: Ken Neumann, USW National Director, 416-544-5951; Denis St. Pierre, USW Communications, 416-544-5990, 647-522-1630, [email protected]