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New report gives the Canada Pension Plan (CPP) expansion a thumbs up

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Corporate / Pension/Retirement / Canada

New report gives the Canada Pension Plan (CPP) expansion a thumbs up

Morneau Shepell's Fred Vettese explains CPP expansion as simplest remedy to unfavourable long-term economic and demographic trends

TORONTO, July 15, 2016 /CNW/ - As the most significant change in Canada's retirement income system in half a century, the announcement of a Canada Pension Plan (CPP) expansion raises questions around whether the proposed changes are for the better. In response to the announcement, Morneau Shepell's Chief Actuary, Fred Vettese, has released the report "The Canada Pension Plan: Part 1 – Past and Present," outlining the history behind the CPP and possible drivers for the proposed enhancement.

In the report, Vettese revisits the circumstances surrounding the birth of the CPP and how the situation has evolved since then. "There are evident parallels between the resistance that greeted the original CPP implementation and present-day arguments against expansion," said Fred Vettese, Chief Actuary, Morneau Shepell. "This provides an opportunity to assess the events that are now unfolding from an historical perspective."

Seniors approaching retirement advocate for expansion, despite seeing minimal benefits

In the report, Vettese sees seven factors that drove the reform, including pressure from labour groups, shortcomings in Pillar 3 savings, government intent to bring the standard of living for retired workers closer to what they enjoyed while working, and Canada's falling behind international benchmarks.

Another driver was the growing population of seniors. According to Statistics Canada, the ratio of seniors to the working population has doubled since 1966 from 13.3 per cent to 26.5 per cent, and will rise to 40 per cent within 20 years.1

Working population fails to recognize individual responsibility for retirement saving

Even though many of the reasons that were cited for CPP enhancement were questionable, there was still a good case to be made for some enhancement. Vettese explains the CPP reform announced by the finance ministers is a reasonable and appropriate move towards a public pension system that better meets the needs of the middle class.

"If Canadians were far more comfortable in dealing with financial matters surrounding retirement, then maybe CPP enhancement would not have been necessary," said Vettese. "That, however, is not the case and a bigger CPP is the simplest way to mitigate future problems. Once we get used to the bigger CPP, we expect it will become an integral part of Canadian culture."

About the report

The full English version of the report can be found here. The French version will be available later this month.

Part 2 of this report, which will be released in September, will analyze the CPP enhancement in more detail, and will consider the longer-term implications for plan sponsors and savers.

About Morneau Shepell Inc.

Morneau Shepell is the only human resources consulting and technology company that takes an integrative approach to employee assistance, health, benefits and retirement needs. The Company is the leading provider of employee and family assistance programs, as well as the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity and improve their competitive position. Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With almost 4,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit

1 "Seniors" are defined here as 65 and over and the working population is defined as 20–64. The 1966 figures are taken from Series A78-93 published by Statistics Canada. The 2016 figures come from Statscan publication 91-520-X.

SOURCE Morneau Shepell - Pension/Retirement

For further information: Cathren Ronberg, Morneau Shepell, 416.355.5632,