VANCOUVER, June 20, 2016 /CNW/ - The expansion of the Canada Pension Plan (CPP) is welcome, despite falling short of Labour's goal to double CPP benefits.
"This CPP increase will help to provide security for hard-working Canadians when they retire," said Unifor National President Jerry Dias. "We would have preferred if the Finance Ministers had gone further, but this is still a significant gain. Higher benefits will result in a tangible impact on the day-to-day quality of life for future retirees."
The Finance Ministers agreed to raise CPP benefits to replace 33 per cent of pre-retirement earnings up to a maximum amount of $82,700. The current CPP replaces 25 per cent of pre-retirement earnings up to a maximum of $54,900. In light of the federal increase Ontario announced that it will reflect on whether to proceed with the Ontario Retirement Pension Plan (ORPP), scheduled to begin in 2018.
"The Ontario government deserves credit for making it clear they would go on their own if need be," said Unifor Ontario Regional Director Katha Fortier. "I'm certain we would not have a deal today without the leverage provided by the ORPP however a stronger, universal, portable CPP is the best outcome for the majority of Canadians. "
CPP expansion will be phased in over seven years starting in 2019. Critics wrongly claim that employers cannot afford the increase in CPP contributions, fearing that businesses will close or reduce staff. The exact same arguments were made in 1997 when then Finance Minister, Paul Martin, increased CPP contributions from 6.6 percent to 9.9 percent of earnings over 7 years. However, during those years real GDP grew, investment rose, employment grew, and the unemployment rate fell from 9.1 percent to 7.6 percent.
"This is an investment by workers to provide themselves with a better future," said Unifor BC Area Director Gavin McGarrigle. "Contributions made during our earning years will pay off down the road as future generations retire."
We urge the Provincial governments to sign the deal by the July 15 deadline to ensure speedy implementation of these CPP reforms. Unifor also calls for a review at the end of the phase-in period to determine the next steps towards increased financial security in retirement.
Unifor is Canada's largest union in the private sector, representing more than 310,000 members.
For further information: please contact Unifor Communications National Representative Kathleen O'Keefe at [email protected], or 416-896-3303 (cell)