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Top-up Gives Opportunity To Save


With appropriate educational tools, which should be developed by the government, and not left to employers, a CPP voluntary top-up would give workers a low cost opportunity for retirement savings, but also allow them to make their own informed decisions as to their retirement, says Priscilla H. Healy, a consultant at Fogler, Rubinoff LLP in the area of pensions and benefits. Writing in its ‘Pension Alert,’ she says there seems to be general agreement that some or even many middle income workers do not save enough for retirement. These are the people who do not have a workplace pension, and have not saved sufficiently in tax-deferred programs. There are a number of policy questions that should be asked, among them whether the state should intervene to force additional retirement savings, she says. Ontario has apparently answered this question in the affirmative. However, the cost of administering its proposed pension plan is substantial, and will require a new bureaucracy, unless, as has been suggested, it is delegated to the existing CPP administration. Instead, she suggests a national agreement for a CPP defined contribution top-up with mandatory employer contributions and a member opt out. The contributions would be used to purchase annuities annually, with catch-up opportunities. While this concept, which has been around for years, has been rejected by the various governments and many commentators, she has never been convinced that other solutions are preferable. And if some people make sub-optimal financial decisions for themselves, so do many in another significant and costly area of life, health, where poor lifestyle choices also sooner or later impact on the individuals and the taxpayer, she says.

Courtesy of Benefits and Pensions Monitor website News Alerts 

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