OTTAWA (Reuters) - Canadians should be able to opt into a supplementary public pension plan to increase their savings for retirement, the main opposition Liberal Party said on Tuesday.
The party said it backed calls by the western provinces of British Columbia, Alberta and Saskatchewan to create what they call a Supplementary Canada Pension Plan, and noted that those provinces will create their own if the federal Conservative government does not act soon.
It was one of three pension proposals the Liberals made ahead of a December 17-18 meeting between Finance Minister Jim Flaherty and his provincial counterparts to discuss pension reform.
“The time is now for the government to step up and make saving for retirement easier and more secure for all Canadians,” Liberal leader Michael Ignatieff said in a statement.
The party also proposes that if a company goes bankrupt, pension plan beneficiaries should have the option of pooling their plan with the public Canada Pension Plan in the hope that the underlying assets would grow over the years to come.
Currently, if a firm goes under, the pension fund’s assets must be converted into annuities, often at a time when markets are low, meaning there is no chance for the assets to rebound with the general market.
The Liberals also advocated changes to legislation that would give preferred creditor status to those on long-term disability benefit plans in the case of bankruptcies. They cited the case of 400 such workers at Nortel Networks Corp, who are facing sharply reduced pensions.
Canada has long had tax-sheltered Registered Retirement Savings Plans (RRSPs) and the government introduced Tax-Free Savings Accounts, starting in 2009, for people to boost personal savings ahead of retirement.
Asked why another, supplementary pension plan would be beneficial, Ignatieff said one attraction would be its simplicity -- just a tick-off on payroll slips -- and its reliability, as it would be managed by the government.
A Liberal statement also quoted the head of the CPP Investment Board, David Denison, as saying RRSPs have relatively high administrative fees and place the burden of investment decisions on individuals, many of whom are not financial experts.
Ignatieff said he did not believe opening up a new public pension plan option would cut into the jobs of those in the RRSP business -- primarily big banks, insurance companies and fund managers.
Reporting by Randall Palmer; editing by Rob Wilson