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The Progressive Economics Forum

Ten things to know about the CPP debate

This fall, Canada’s Parliament will debate a proposal to expand the Canada Pension Plan (CPP).  And over at the Behind the Numbers web site, I’m co-author of a blog post titled “Ten things to know about the CPP debate.” The blog post’s other co-authors are Allan Moscovitch and Richard Lochead.

Points raised in the blog post include the following:

-CPP covers a smaller percentage of a retired person’s income than similar schemes in most OECD countries.

-CPP helps reduce poverty in Canada, but it doesn’t provide any of its beneficiaries with sufficient retirement income.

-CPP’s former Chief Actuary has proposed an expanded CPP scheme that would almost eliminate the need for private pension schemes in Canada.  This proposal has been virtually ignored by most of Canada’s elected officials and journalists.

The link to our full blog post is here.

Comments

Comment from Larry Kazdan
Time: October 29, 2016, 9:19 pm

1. Kudos For The Payroll Tax Holiday, Let’s Make It Permanent

http://www.businessinsider.com/kudos-for-the-payroll-tax-holiday-lets-make-it-permanent-2010-12

“The real purpose of the payroll tax is NOT to “fund” a “pay as you go” scheme, but to prevent wage earners from consuming all the output, so something is left for those who do not work. Today we are far below full employment, so we do not need to reduce consumption of current workers—rather we need to put more people to work to produce goods and services for the elderly. If we should ever get to full employment, then we will need higher taxes.”

2. Pension Funds Are So Big They’ll Create A Bubble In Any Market …
http://www.businessinsider.com/pension-fund-bubble-creators-2010-9

“To conclude, pension funds are so large that they
will bubble-up any financial market they are allowed
to enter—and what goes up must come down. The problem
really is that what Hyman Minsky called managed money
(including pension funds, sovereign wealth funds,
university endowments, money market funds, etc), taken
as a whole, is simply too large to be supported by the
nation’s ability to produce output and income
necessary to provide a foundation for the financial
assets and debts that exist.

***

What we now need to realize is that the Social Security leg of our retirement stool will play the biggest role for most of tomorrow’s seniors. Effectively what Social Security will do is to tax tomorrow’s workers so that they cannot consume all of tomorrow’s output. And it will pay benefits to tomorrow’s seniors so that they can buy some of tomorrow’s output. Exactly how that division of tomorrow’s output will be made is a decision that must be made by tomorrow’s voters. All that we can do today is to try to keep our economy strong, educate our young people so that they will be productive tomorrow, and improve our longest-lived public infrastructure.”

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