On Monday, Canada’s finance ministers announced an “agreement in principle” to expand the Canada Pension Plan (CPP), which will force Canadians to contribute more to the program.
Canadians may be forced to contribute up to an extra $3,250 more to the CPP each year.
Lack of a workplace pension does not doom someone to a financially insecure retirement.
In 2014, these non-pension assets totalled $9.5 trillion, dwarfing the $3.3 trillion assets in the formal pension system.
A two dollar increase in CPP income could result in a one dollar reduction in GIS benefits.
Accounting for non-pension assets in projections of future retirement income makes a difference.
This sea change in labour-force behaviour of older workers was completely unanticipated by research into pension adequacy.
A higher CPP benefit could trigger a reduction in federal (and provincial) government benefits targeted at low-income seniors.
Finance Minister Bill Morneau will soon meet with his provincial counterparts to discuss CPP expansion, which could include increased mandatory contributions.