Conservative Party platform
Liberal Party platform
New Democratic Party platform
Common themes
The three national political parties have released their pension platforms in the federal election campaign. Partly owing to the ageing demographic, high voter turnout among seniors and growing concerns over security in retirement, pension issues have become increasingly prominent in this federal election. The official platforms of the three parties are quite brief and lacking in detail. They are summarised below, in alphabetical order.
The Conservative Party is committed to proceeding with steps to implement the pooled registered pension plan (PRPP). The federal and provincial finance ministers agreed to a framework for the PRPP at meetings held in December 2010; since then, the federal government has been holding consultations with stakeholder groups (for further details please see "Pension reform in Canada: a national report card" and "Federal government consults on pooled registered pension plans").
The party will double the annual contribution limit to the tax-free savings account from C$5,000 to C$10,000 once the federal budget is balanced within the next full term of office. Finally, the party will provide a top-up to the guaranteed income supplement, providing up to C$600 extra per year for single seniors and up to C$840 per year for senior couples.
The Liberal Party platform outlines that:
- in 2008, 75% of private sector workers did not participate in a registered pension plan;
- contribution levels to registered retirement savings plans (RRSPs) have not grown over the past 10 years;
- only one-quarter of eligible taxpayers contribute to RRSPs; and
- investment management fees for RRSPs are often 2% or more on assets.
The party promises to enhance the Canada Pension Plan in two ways. First, it supports a gradual increase in defined benefits under the Canada Pension Plan. The platform does not specify how large the increase would be, the timeframe for the increase or the contributions required to support the increase. Second, the party proposes a new, voluntary supplement to the Canada Pension Plan called a 'secure retirement option'. It would operate in a similar fashion to the PRPP, except that contributions would be made by employers or employees or both on a defined contribution basis to the Canada Pension Plan instead of to a financial institution. The fund management fees would be minimal.
The party proposes the creation of a 'stranded pension agency' to deal with pensions in the event of corporate bankruptcy. This agency would permit pension plan members caught up in their employer's bankruptcy to transfer their pensions to the Canada Pension Plan, in order to protect better their remaining pension assets. The party also proposes to enhance the guaranteed income supplement by C$700 million a year. It is not clear how this would translate for single and married seniors.
The New Democratic Party proposes to increase benefit levels under the Canada Pension Plan, with the eventual goal of doubling benefits. The platform does not provide a timeframe for the increases or specify the amount of additional contributions that will be necessary to support the increased benefit levels. The party also commits to working with the provinces for employers and employees to make voluntary contributions to an individual public pension account. It is likely that this refers to the PRPP.
The party proposes to amend bankruptcy and insolvency legislation to give a super-priority to pensioners and those in receipt of long-term disability payments. These payments would rank ahead of other creditors in the insolvency process. The party also proposes to increase the guaranteed income supplement in its first budget to what it considers to be a sufficient level. No further details are provided.
There are a couple of common themes to the three platforms, recognising a need to strengthen Canada's pension system. There is a common commitment to introduce an additional voluntary pension vehicle, whether it is the PRPP or the secure retirement option that would permit additional contributions to the Canada Pension Plan. There is also a commitment to increase benefits under the guaranteed income supplement. While a consensus has been building among provincial finance ministers for enhancements to benefit levels under the Canada Pension Plan, this is one important policy area in which the federal parties diverge.
For further information on this topic please contact Mark Newton at Heenan Blaikie LLP by telephone (+1 416 360 6336), fax (+1 416 360 8425) or email ([email protected]).