Mythbusting the CPP expansion
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![Page 1: Mythbusting the CPP expansion](https://reader030.fdocuments.in/reader030/viewer/2022020323/568c38731a28ab02359efa0b/html5/thumbnails/1.jpg)
CPP EXPANSION
:te/cope 491
MFL – CLC Leadership Assembly
Remarks by Paul MoistCUPE National President
March 2, 2011
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MYTH
“CPP expansion..............an excessive response to a problem that affects only a segment
of the population.”
FACTS
• 65% of workers have no workplace pension overage.
• In 2008, only 34% of tax filers made an RRSP contribution.
• 2005 median value of individual RRSP - $60,000.
• Private sector employers, large and small, are backing away from pension plan sponsorship.
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MYTH
“Increasing CPP premiums could cost jobs.”
FACTSFACTS
• No evidence for such assertions. Unemployment rate fell during 5-year phased CPP contribution hikes (1990s).
• John Kesselman, Jack Mintz, Professor Bev Dahlby, Princeton Economist Alan Blinder, countless others reject the job-killer argument.
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MYTH
“CPP expansion will not benefit those close to retirement”
FACTS
If you are age…Your CPP pension now without labour’s plan…
Your CPP pension with labour’s plan…
This table assumes a worker will not draw CPP pension before age 65 and will make at least $43,000 per year. The pension income shown in each example is in addition to the pension entitlement earned from prior contributions.
28 (37 years of contributions) $10,635.28/year$886.27/month
$21,270.65/year$1,772.54/month
38 (27 years of contributions) $7,760.88$646.74
$15,521$1,293.48
48 (17 years of contributions) $4,141.03$345.09
$8,282.05$690.17
58 (7 years of contributions) $2,012.08$175.17
$4,024.16 $333.34
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MYTH
“The private sector should be encouraged to develop innovative savings vehicles to meet
Canadians’ needs.”FACTS
• 44 years of private sector innovation hasn’t worked.• 44 years of private sector innovation hasn’t worked.
• Average management fees Canadian balanced fund: 2.6%
• CPP Investment Board fees 2010: 0.5%
• $10,000 investment, annual compounded 5% (ROR) achieves asset of $72,000 after 45 years with less than 0.5% management fee.
• $10,000 investment, annual compounded 5% (ROR) achieves asset of $29,500 after 45 years in a mutual fund with a 2.5% management fee.
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MYTH
“Now is not the right time to expand the CPP”.
FACTS
• CPP expansion opponents will never agree to a “right time” to • CPP expansion opponents will never agree to a “right time” to expand CPP.
• Hundreds of billions in corporate tax cuts by feds/provinces since 2000. These and small business tax cuts more than make up for increased employer costs.
• CPP covers all workers, levels the playing field for all employers.
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MYTH
“Is 70 the new 65? Canada must catch up on trend to raising retirement age.”
FACTS
• Raising the retirement age avoids the real problem which is that • Raising the retirement age avoids the real problem which is that Canadians are increasingly concerned about retirement income.
• 40% aren’t saving for retirement because they can’t afford to.
• Only 25% of Canadians very confident they will be able to save enough.
• 40% of Canadians expect to have to work once they’ve retired.
Source: CUPE/Environics polling August 2010
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MYTH
“Public Sector Pensions are the problem”.
FACTS
• CFIB campaign to attack public sector workers pay/pensions.
• 30-year public employee, earning $40,000 average salary, receives an $18,000 workplace pension plus CPP.
• CUPE/Environics poll August 2010, 80% of respondents thought typical public sector pension was “about right/too low.”
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MYTH
“The proposed Pooled Registered Pension Plan (PRPP) is a viable solution”.
FACTS
• Banks, fund companies lobbied hard for PRPP, which mirrors proposal • Banks, fund companies lobbied hard for PRPP, which mirrors proposal made in 1984 by federal Liberal government but never implemented.
• No different than group RRSP—a system that hasn’t worked.
• Voluntary PRPP won’t induce employers who currently don’t sponsor an RPP or group RRSP.
• Six in 10 Canadians oppose Ottawa’s move on PRPP and delay of CPP improvements (CUPE/Environics poll January 2011).
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FACT
“Canadians get it and support CPP expansion.”
• 80% of Canadians think CPP expansion should be top priority for governments (74 per cent of Conservative supporters agree);
• Two-thirds of Albertans want their government to work with others • Two-thirds of Albertans want their government to work with others to improve CPP;
• 81% believe retirement security/pensions important issues to debate in federal election.
Source: CUPE/Environics polling January 2011
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Remember…
Our arguments are strong…we’re united…
CPP Expansion will be a key federal election issue…CPP Expansion will be a key federal election issue…
And we will win!