Fraser Institute laments lack of detail concerning CPP expansion

By Andrew Rickard | June 24 2016 01:27PM

For a government that has made much of being open and transparent, The Fraser Institute says the Liberals have done a poor job communicating the key details of the expanded Canada Pension Plan (CPP).

In a recent post to the Fraser Institute web site, authors Charles Lammam and Hugh MacIntyre listed a number of questions about the enhanced CPP that remain unanswered:

  • What will the rate increase be?
  • Will there be multiple rates?
  • How long will it take for contributors to be fully eligible for the new, higher benefit?
  • Has the benefit calculation been adjusted at all?
  • Has the exemption period been changed?
  • What specific changes will be made to the the Working Income Tax Benefit (WITB) and to what degree will they make the program redistributive?

"You would expect that a government committed to openness and transparency would release details of major changes to such an important program in a timely manner," say the authors. "These details are critical for a meaningful public debate about the costs and benefits of such a reform. And yet, the government has been frustratingly unclear about how much more Canadians will be required to contribute to the CPP."

When Federal Finance Minister Bill Morneau announced the changes to the CPP, he indicated that workers who earn about $55,000 would be required to contribute $7 a month starting in 2019 and $34 a month once the change was fully implemented in 2023. The Fraser Institute argues that this is not enough information to determine the true cost of the plan expansion. What, for example, will be the contribution level be for those not making $55,000? Do these amounts include the employer contribution?

"The agreement calls for the rates to be phased in over five years, but will the rate increase by the same amount each year or will some years see larger increases? Businesses would also find this information useful as they think through how they are going to handle the increased cost of a higher CPP rate," conclude Lammam and MacIntyre.