Pension reform requires government role: B.C. Finance Minister

Hansen released a previously confidential paper on Thursday which identifies two ideas as the most promising options, involving the creation of a voluntary supplemental tier to the CPP and expanding the CPP into a more comprehensive and mandatory plan.

According to the Canadian Press, Hansen’s report contradicts an earlier paper by economist Jack Mintz which found that the country’s retirement system was not in nearly as much trouble as some have suggested. At a minister’s meeting in Whitehorse in December, the findings of the Mintz report were accepted over those of a more alarming paper by pension consultant Bob Baldwin.

Hansen—chair of the provincial steering committee on pensions—argues that serious gaps have emerged in pension coverage that will only grow in severity with time. A solution, he suggests, is best brought about by government action.

“The evolving character of the retirement market points to a major role for governments,” he says.

He argues that due to the complex nature of retirement savings products and the lack of financial literacy, the government—as opposed to the private sector—should protect the retirement interests of Canadians.

“This suggests a role for governments in ensuring that individual interests are protected and that all Canadians have the opportunity to save for their retirement in a cost-effective and efficient manner.”

However, Hansen does mention that the private sector should be involved to offer expertise, and that the two key options—a supplementary tier to the CPP and an expanded CPP—could be blended if needed.

The governments of B.C and Alberta were pressuring the federal government to take the lead on pension reform in order to address the millions of Canadian workers with little or no pension coverage, save for the CPP. Absent such leadership, the two provinces said they were ready to go it alone with the Alberta/B.C. plan, which would provide a supplemental, voluntary plan for all workers and small business owners.

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