Posted: Tuesday, 12 April 2011

CLC President Ken Georgetti responded to a column in the Winnipeg Free Press by an employee of the Fraser Institute who claimed that the Canada Pension Plan has higher management expenses than has been stated by the CLC.

As published in the Winnipeg Free Press, Monday April 11, 2011

We are grateful for Neil Mohindra's vindication of our position regarding the Canada Pension Plan's low costs (Election brings out myths about CPP, April 7). But he shouldn't be allowed to deflect attention from the financial industry's retirement savings rip-off. With Canadians holding $650 billion in mutual funds, there's a lot of money to be made. A 2.7 per cent management expense ratio on a typical mutual fund means that over $17.5 billion a year flows into management fees and profit.

Mohindra also claims private savings will ensure that Canadians have adequate incomes in retirement. In fact, a growing body of research tells us the opposite. Declining workplace pension coverage and low levels of private savings have meant that we are falling short when it comes to maintaining living standards in retirement.

If we don't improve the CPP, we will have to keep raising the Guaranteed Income Supplement for poor seniors. Without an improved CPP, the cost of providing GIS will rise from $9.2 billion in 2011 to $22.2 billion in 2030.

This represents an important and growing burden on public finances and a taxpayer subsidy to companies who refuse to provide decent pensions to their employees. The most effective low-cost way to improve retirement income adequacy for all Canadians is to expand the Canada Pension Plan.

KEN GEORGETTI
*Canadian Labour Congress*
Ottawa