New pension plan data released Thursday by Statistics Canada highlights why Finance Minister Jim Flaherty is wrong to fight the expansion of the Canada Pension Plan.
According to the data, when applied to the total number of private sector employees as reported in the Labour Force Survey for 2010 and 2011, just 13.7% of private sector employees were covered by a traditional defined benefit pension plan in 2011, down from 14.1% in 2010.
In both years, just over one in four (26.9%) of private sector employees were covered by a pension plan. But the proportion of those in some kind of a plan who were in a traditional defined benefit plan -- which provides a guaranteed earnings replacement pension as opposed to a variable amount determined by investment returns -- fell from 52.3% to 50.9%.
The CPP is a defined benefit pension plan that replaces up to 25% of earnings, and also provides a pension fully indexed to inflation.
For six out of seven private sector workers, that is the only defined benefit pension plan they have.
If that's not a reason to expand CPP, here are a few more facts for Flaherty: Canada has the highest private investment fees in the developed world, on average five times those of the CPP costs, and we can double CPP pension benefits by saving less than 3% more of our salaries because the CPP structure is cost-efficient.
Photo: [email protected]. Used under a Creative Commons BY-ND 2.0 licence.
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