If I read just one more story about pension reform I might just have to scream. Why? Because the main reason they are looking at it is basically everyone collectively realized many of the boomers have failed to save for retirement. Yet ironically any of the proposals coming out to either expand the CPP or this new Pooled Registered Pension Plans fail to address the original reason.
Let’s for example look at expanding the CPP. If you did so, the system is based on a pay as you go model now. So even if you doubled the benefit (in some extreme proposals) the boomers would see almost no increase into their benefit since they will only pay in a for a few more years. Only kids just out of high school would ever see the full increase regardless of the increase of benefit chosen.
While I appreciate the idea behind the Pooled Registered Pension Plans (PRPP) and making people default to opt in with them I think the government is is needlessly complicating matters. Saskatchewan for example already has a low cost, pooled plan that happens to be voluntary and heck even available to non-Saskatchewan residents. All you would need to do is add on a default opt in for anyone who didn’t have a pension plan in the province and you would have created the same idea as the PRPP’s. Yet the same problem will occur with the boomers, they won’t put in enough to make any significant difference to their retirements.
Basically the boomers that didn’t save are already fucked. They will have to work to at least 70 in order to max out any CPP they get and save what ever they can for their last working years and hope to God that a future government doesn’t cut back OAS on them. It isn’t nice, but it is true: they won’t be saved by any pension reform. At best we can take the lesson to younger generations to get your act together or have the government force you to save at some point. Forced savings isn’t nice for those that do have their act together, but the option for governments is starting to look better and better to solve the issue. The carrot of RRSP’s has failed to partly do its job, now it will be the stick.
So are you sick of hearing about pension reform? Or have you heard any good ideas yet on what to change?