The most powerful CPP reform is right under our noses – and it’s cost-efficient
In last week’s spring economic update, the federal government announced plans to reduce the base Canada Pension Plan contribution rate to 9.5 per cent from 9.9 per cent, acknowledging the cost-of-living pressures households face today.
But as stewards of the CPP, federal and provincial finance ministers must balance two questions: Are we collecting the right level of contributions to sustain the plan? And are we delivering the best retirement outcomes?
The rate cut is welcome relief and answers the first question but the second still needs an answer. With the largest cohort of workers in history entering retirement, getting the most out of CPP has never mattered more.
Our suggested solution – the Pension Delay Guarantee (PDG) – would help Canadians do exactly that. The idea is simple: Give people who delay starting their CPP but who die prematurely the money they lost out on. The best part is, there’s enough money to fund this.
