CLC Criticizes Ottawa for Introducing PRPPs

OTTAWA, ONTARIO--(Marketwire - Nov. 17, 2011) - The President of the Canadian Labour Congress says the federal government is making a big mistake in promoting Pooled Registered Pension Plans (PRPPs) as a solution to the pensions crisis in Canada.

Ken Georgetti was responding to a government bill that would pave the way for introducing PRPPs at the federal level. "It's really nothing more than a piecemeal approach that rewards banks, insurance companies and mutual fund companies instead of offering real retirement security options for everyone," Georgetti says. "Every credible piece of information that we have seen indicates that PRPPs would be far inferior to an expanded Canada Pension Plan in providing retirement security for Canadians. This is an ideological move that flies in the face of common sense and good research."

PRPPs are privately administered workplace pension plans that resemble group RRSPs. Unlike the CPP:

• they will be unable to provide a secure, predictable benefit in retirement, indexed against inflation, until death;
• they won't require employers to contribute one cent;
• they will not be able to match the CPP's very low cost;
• they will lack the CPP's survivor and disability benefits;
• and it will be a long time, if ever, before they can match the CPP's universal portability, in which the pension follows the worker no matter where he or she is employed.

Georgetti adds, "Given the haste with which the government has pursued this experiment, we will be watching to see whether the PRPP legislation provides for controls on the outrageously high management fees charged by banks and mutual fund companies on pension investments."

At the provincial finance ministers meeting in December 2010, the majority of the provinces pressed the federal government to follow a dual track on pension reform that included examining proposals to expand the CPP. The labour movement along with citizens and retirees' groups continue to advocate for a doubling of future CPP benefits that would be paid for by a modest, phased-in increase in CPP contributions paid for equally by workers and their employers.

The Canadian Labour Congress, the national voice of the labour movement, represents 3.2 million Canadian workers. The CLC brings together Canada's national and international unions along with the provincial and territorial federations of labour and 130 district labour councils. Website: www.canadianlabour.ca Twitter: @CanadianLabour