NBUPPE joins national campaign to strengthen CPP benefits

Employers without pension plays should be asked to pay higher premiums

Fredericton (17 March 2008) – The New Brunswick Union of Public and Private Employees (NBUPPE) has joined with the National Union of Public and General Employees (NUPGE) in a campaign to change Canada Pension Plan (CPP) rules.

The goal is to require employers without workplace pension plans to pay higher Canada Pension Plan (CPP) premiums. The extra money would be used to pay higher CPP benefits at retirement to workers who do not have a workplace pension plan.

Access to a workplace pension is a critical factor in overcoming poverty among seniors. In New Brunswick an increasing percentage of the workforce has no pension coverage.

According to Statistics Canada, the percentage of workers in New Brunswick covered by a registered pension plan in 2005 (the latest year in which data is available) was 39.6%, a decline of 7.7% since 1983 when 47.3% of workers were covered by a pension plan.

Deborah Lacelle, NBUPPE president, says there are few incentives in Canada for employers to create pension plans "despite the obvious social and economic benefits of doing so" for workers and for society in general.

Disincentives now exist

"In fact, disincentives exist to discourage employers from setting up their own plans," Lacelle adds. “Employers with pension plans now pay exactly the same CPP premiums as those without plans. At the same time, they assume legitimate administrative costs and requirements set out in pension legislation, including funding obligations and reporting and actuarial evaluations,” she says.

“Employers have a moral obligation to their employees to provide decent pensions, but our system does very little to encourage this behavior. Why should an employer assuming the burdens and obligations of providing a pension plan pay the same CPP premiums as employers who do not? We don’t think that makes sense.”

Lacelle stated that she has written New Brunswick Premier Shawn Graham asking that the government give consideration to supporting the proposal.

The CPP is one of the largest and most healthy pension plans in the world. By 2010 it is anticipated to become the largest pension plan in the world.

Contributions to the plan are expected to exceed benefits paid until 2022, providing a 16-year period before a portion of the investment income from the CPP reserve fund is needed to help pay CPP benefits. Changes to the CPP require the approval of at least two thirds of Canadian provinces representing at least two thirds of the country's population. NUPGE

More information:
Charge higher CPP premiums to firms without pension plans
NUPGE Backgrounder: Expanding CPP benefit coverage to workers who do not have a pension plan- pdf