Friday, August 11, 2017

Canada's Pension reform still needs some work

A report on the latest pension reform by the Federal Government of Canada is interesting reading. The authors have made some interesting points. Two I agree with are:
  1. The retirement income system requires regular review and adjustment to ensure it responds to ever-changing demographic, labor market and financial environments. The recently adopted changes to the CPP mark the third major reform in its 50-year history, and there have been smaller changes along the way. There is much to commend in the management of the CPP and the RIS more generally. But it could be substantially improved in several areas. In particular, the triennial review of CPP finances should be more open and transparent, and there should be a regular assessment of the income prospects of the current and future elderly. This will require addressing gaps in the data and modeling capacity of governments.
  2. The individual reforms to the retirement income system introduced by the current government are a step forward. But, taken together, they amount to less than might have been hoped for. They are not coordinated, they ignore other components of the retirement income system and personal income taxes, and they fail to respond to evolving socio-economic conditions. What is needed is a holistic, forward-looking approach to pension reform. This is an area where governments will have to show leadership in assessing the retirement income prospects of Canadians and framing options for reform. Such leadership was much more evident in previous rounds of the pension debate.

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