Canada’s top pension guru said his idea for a supplementary pension plan has risen again.
Speaking at a Rotman School of Management in event in Toronto yesterday, Keith Ambachtsheer, director of the Rotman International Centre for Pension Management, said his plan may be back on the table because of Ontario’s decision to create a supplementary pension. (He’s a member of an advisory group that’s advising the province on how to strengthen retirement income security.)
“It’s nice that something that looked like it was dead is now back in play,” said Ambachtsheer.
Participation by private sector workers in an employer-sponsored pension plan has been on decline for 20 years, he noted. Now only about 20% of employees are members of a registered pension plan.
Ambachtsheer said that about 15% of those retiring soon will experience a drop in their standard of living. He added that when those who are currently between ages 25 and 35 get to their 60s and 70s, 40% will have a significant drop in their standard of living.
While two main solutions have been proposed, Ambachtsheer is not an advocate of either expanding the Canada Pension Plan (CPP) or creating pooled registered pension plans (PRPPs).
“It sounds great on paper, but it’s more complex,” said Ambachtsheer, talking about the expanded CPP. “Do we really want a one size fits all for a targeted program?”
As for the PRPP option, Ambachtsheer said that it’s voluntary, not mandatory.
“We have lots of voluntary programs,” he said. “That’s the problem.”
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