CPP EXPANSION

:te/cope 491

MFL – CLC Leadership Assembly

Remarks by Paul MoistCUPE National President

March 2, 2011

MYTH

“CPP expansion..............an excessive response to a problem that affects only a segment

of the population.”

FACTS

• 65% of workers have no workplace pension overage.

• In 2008, only 34% of tax filers made an RRSP contribution.

• 2005 median value of individual RRSP - $60,000.

• Private sector employers, large and small, are backing away from pension plan sponsorship.

MYTH

“Increasing CPP premiums could cost jobs.”

FACTSFACTS

• No evidence for such assertions. Unemployment rate fell during 5-year phased CPP contribution hikes (1990s).

• John Kesselman, Jack Mintz, Professor Bev Dahlby, Princeton Economist Alan Blinder, countless others reject the job-killer argument.

MYTH

“CPP expansion will not benefit those close to retirement”

FACTS

If you are age…Your CPP pension now without labour’s plan…

Your CPP pension with labour’s plan…

This table assumes a worker will not draw CPP pension before age 65 and will make at least $43,000 per year. The pension income shown in each example is in addition to the pension entitlement earned from prior contributions.

28 (37 years of contributions) $10,635.28/year$886.27/month

$21,270.65/year$1,772.54/month

38 (27 years of contributions) $7,760.88$646.74

$15,521$1,293.48

48 (17 years of contributions) $4,141.03$345.09

$8,282.05$690.17

58 (7 years of contributions) $2,012.08$175.17

$4,024.16 $333.34

MYTH

“The private sector should be encouraged to develop innovative savings vehicles to meet

Canadians’ needs.”FACTS

• 44 years of private sector innovation hasn’t worked.• 44 years of private sector innovation hasn’t worked.

• Average management fees Canadian balanced fund: 2.6%

• CPP Investment Board fees 2010: 0.5%

• $10,000 investment, annual compounded 5% (ROR) achieves asset of $72,000 after 45 years with less than 0.5% management fee.

• $10,000 investment, annual compounded 5% (ROR) achieves asset of $29,500 after 45 years in a mutual fund with a 2.5% management fee.

MYTH

“Now is not the right time to expand the CPP”.

FACTS

• CPP expansion opponents will never agree to a “right time” to • CPP expansion opponents will never agree to a “right time” to expand CPP.

• Hundreds of billions in corporate tax cuts by feds/provinces since 2000. These and small business tax cuts more than make up for increased employer costs.

• CPP covers all workers, levels the playing field for all employers.

MYTH

“Is 70 the new 65? Canada must catch up on trend to raising retirement age.”

FACTS

• Raising the retirement age avoids the real problem which is that • Raising the retirement age avoids the real problem which is that Canadians are increasingly concerned about retirement income.

• 40% aren’t saving for retirement because they can’t afford to.

• Only 25% of Canadians very confident they will be able to save enough.

• 40% of Canadians expect to have to work once they’ve retired.

Source: CUPE/Environics polling August 2010

MYTH

“Public Sector Pensions are the problem”.

FACTS

• CFIB campaign to attack public sector workers pay/pensions.

• 30-year public employee, earning $40,000 average salary, receives an $18,000 workplace pension plus CPP.

• CUPE/Environics poll August 2010, 80% of respondents thought typical public sector pension was “about right/too low.”

MYTH

“The proposed Pooled Registered Pension Plan (PRPP) is a viable solution”.

FACTS

• Banks, fund companies lobbied hard for PRPP, which mirrors proposal • Banks, fund companies lobbied hard for PRPP, which mirrors proposal made in 1984 by federal Liberal government but never implemented.

• No different than group RRSP—a system that hasn’t worked.

• Voluntary PRPP won’t induce employers who currently don’t sponsor an RPP or group RRSP.

• Six in 10 Canadians oppose Ottawa’s move on PRPP and delay of CPP improvements (CUPE/Environics poll January 2011).

FACT

“Canadians get it and support CPP expansion.”

• 80% of Canadians think CPP expansion should be top priority for governments (74 per cent of Conservative supporters agree);

• Two-thirds of Albertans want their government to work with others • Two-thirds of Albertans want their government to work with others to improve CPP;

• 81% believe retirement security/pensions important issues to debate in federal election.

Source: CUPE/Environics polling January 2011

Remember…

Our arguments are strong…we’re united…

CPP Expansion will be a key federal election issue…CPP Expansion will be a key federal election issue…

And we will win!