On last night's Lang and O'Leary Exchange, given that the odds were 3 to 1/2, Armine Yalnizyan held her own against Kevin O'Leary (Canada's poster boy for capitalism), a bank economist, and a corporate CEO. Amanda Lang did her best to make sure that Armine was heard in the din of male, finance-first sputtering from these gleefully drooling mouths: profit first; real people, nothing more than clients. Their only concern was should clients buy in at 3%, 7%, or 10%. But, being the generous folks they are, they're also going to lower their rates. Whew!
There is much to object to in this Pooled Registered Pension Plan proposed legislation, but three things stand out:
1) They are different from RRSPs only in that a small business can set up - with a third party investment agent - automatic contributions from employees (with an opportunity to opt out or not join). Yeah, sure, but there is no obligation to match contributions from an employer, as there is with the CPP, and most small businesses have already claimed that they cannot afford to contribute to such a plan. At one point, Armine asked why are employers being let off the hook? The implied if not fully articulated answer: we've already got a bunch of suckers lined up; we don't need them.
2) They're voluntary. So how many people of the 60% demographic without pensions are going to opt in when many are living paycheck to paycheck as it is, already up to their proverbial eye balls in debt, a record 62% of the economy in mortgage and credit-line debt? (god [yes, Pat, my homage to you: a small g] help them if housing prices decline significantly or interest rates climb appreciably.) Compulsory participation in the CPP based on income level is the only way to enhance pensions effectively, and there is nothing, so far as I know, preventing any business, small or otherwise, from buying into that except the proft motive.
3) Pooling both expands the asset base and presumably diversifies or lessens investor risk, but, as Armine pointed out, there is no better diversified asset based and risk secured pension operation in Canada than the CPP. Why not take advantage of it?
The provinces have still to buy in on the legislation, but it seems clear then that this is another for profit, market-driven, capitalist, private sector scheme hatched by the Harperites to favour their sometimes friends in finance, though, to be fair, they did try to float a CPP enhanced proposal earlier this year only to be shot down by, as Armine reminded us, Alberta and subsequently Quebec, both of whom feared the political ramifications of increased CPP premiums. This is really no surprise, for almost all policy decisions on taxes or the economy are investor or financial sector driven ones in the Harper Regime. And we should also remember on occasions like this to take what any bank economist says on a talk show with a full sack of salt, for they have an undeclared conflict of interest and speak essentially not for the general economy but the financial sector. CEOs of course should axiomatically be viewed with scepticism on such shows.
Incidentally, The Taxpapyer Federation of Canada wants the government to shift away from CPP support for government employees to PRPP plans on the grounds of projected pension liabilties. Isn't that just ducky?
Lang and O'Leary Novmber 17