Canadians are more confident the Canada Pension Plan will be there for them when they retire than they did a decade ago as a result of reforms taken a decade ago, said the Right Honourable Paul Martin on Monday.
Speaking in Toronto at the C.D. Howe Institute’s policy conference, The Canada Pension Plan Reforms Ten Years After: Lessons and Prospects, the former prime minister and former finance minister said the increasing loss of confidence in the CPP was one of the reasons that the federal and provincial governments sat down to repair the plan.
“Indeed many Canadians, especially those in their 20s and 30s, expected no pension at all when they retired. For them, the CPP was a dead horse and one not even worth flogging,” Martin said. “This lack of confidence went to the heart of government and we could not let that stand.”
Canada’s baby boomers were going to start retiring soon and the responsibility for Old Age Security and the Guaranteed Income Supplement was entirely that of the federal government alone.
“If we reached 2011 with large numbers of Canadians potentially falling into financial distress because the CPP failed them, I knew that the federal government would be on the hook for commensurate financial support,” he said.
To prevent that from happening, the Government of Canada and the provinces agreed to raise CPP contribution rates, establish the Canada Pension Plan Investment Board to invest funds not immediately needed for benefits, and change the administration of calculation of benefits.
Today, Canada is in much better shape than it was a decade ago, Martin said and added that it is the only G7 country with fiscal surpluses and one of only two with a national pension plan that is financially secure.
“What we did in the mid-1990s and what has been done since, was and is an important accomplishment of which we can be proud,” he concluded. “We have built a pension plan and an investment fund that the world envies. Let’s keep it that way.”
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