CPP benefits should be doubled, says CAW
The head of the Canadian Auto Workers union is throwing his support behind a proposal that would see Canadians pay more into the Canada Pension Plan to greatly increase their retirement benefits.
CAW president Ken Lewenza said he supports a proposal by the Canadian Labour Congress to gradually increase the amount workers pay into the CPP by approximately three per cent over seven years. This would allow the plan to double the average amount it is able to pay out to retirees.
“It’s incumbent on all Canadians to continue to work towards increases to the Canada Pension Plan because there’s no greater security than a national program,” Lewenza said in an April 9 interview from Port Elgin, Ont., where he is attending a meeting of the CAW’s national council.
Lewenza said the global economic crisis proved Canadians can’t rely on private sector pension plans to carry them through their retirement and that Ottawa has a responsibility to guarantee a certain level of income to Canada’s retirees.
Currently, the average Canadian receives a monthly retirement pension of $502.57 from the CPP.
The Canadian Labour Congress proposal would “effectively double” the average benefit and would see the maximum increase to $1,635 from the current level of $934.17.
“It gives people security and it puts people at a standard of living that’s respectable,” Lewenza said of the proposal.
To pay for this, Canadians would see a greater amount deducted from their paycheques. Right now, workers pay 4.95 per cent of their salary into the CPP up to a salary limit of $46,300 per year. Following seven years of gradual increases, the proposal would see that increase to 7.8 per cent.
Almost two thirds of working Canadians have no registered pension plan coverage and about one-third of Canadian families have no retirement savings whatsoever.
The adequacy of retirement income has deteriorated quickly in the past few years as more and more companies abandon pension arrangements or switch from defined benefit plans to defined contribution plans, which are typically less generous and more subject to market risk.
The global financial crisis and the aging of Canada’s population have exposed the problems of Canada’s pension system and spurred widespread calls for action.
Finance Minister Jim Flaherty is in the midst of a cross-country tour to discuss proposed changes to Canada’s private and public pension system. He will be in Winnipeg and Calgary on Monday.
