Because of our current system of public pensions, two thirds of the lower wage earners will receive more income in retirement than they do at age 50.

For middle to high income earners, they have the means to save for their retirement so why are we concerned about providing them with retirement income? If these people are unable to afford the retirement they envisioned because they decided to allocate their incomes to other pursuits, why should the rest of us pay to get them back on track? A better use of time and resources would be education and coaching on how to budget and manage personal finances. I suspect that a major reason people fall short of their personal goals is the misuse of credit driven by the aggressive tactics of credit “pushers” so let’s fix that problem.

And finally, the top income earners deserve no additional help from taxpayers to enjoy their retirement but changes to universal programs like CPP will put more money in their pockets so clearly increasing CPP benefits across the board is a waste.

By the way, back to poor seniors. Those who never worked or contributed small amounts to CPP will never benefit from an increase in CPP benefits anyway. Two times zero is still zero. Increasing OAS by shifting benefits from rich seniors to poor seniors would be a much better way to provide more income to any seniors that aren’t able to afford decent housing or adequate and nutritious food. In my opinion, this reason and the previous one should be enough logic to stifle any further talk about increased CPP.

So who exactly needs help? It’s ludicrous to create a solution if we don’t know precisely what the problem is. Simply repeating over and over again that Canadians aren’t saving enough to retire comfortably doesn’t make it a fact. Throw out the old chestnut about comparing current incomes against savings and stating that people aren’t saving enough to maintain post retirement incomes of 70% of their working incomes and drawing a line from that to the need for higher public pension rates is lazy at best. Seventy percent is too much for some and not enough for others. You will need the assets to create a safe income for the lifestyle you choose. It takes some effort to do this math but to make broad changes for undefined objectives is not good policy.

Aside from that, here are more reasons not to implement any CPP changes:

• Cash flow drag for all employees, employers and self-employed Canadians.
It’s a fact that overhead costs are very important to business owners so they try their best to keep their cost down and an increase in CPP premiums will absolutely factor in on any decision about increasing or keeping employees. Anyone who disagrees has never run a business. Earlier this year, Ken Georgetti agreed that this was not a good time to increase EI premiums for that exact reason. But now he’s doesn’t perceive an increase in CPP premiums as a drag. I sent him an email asking why but he didn’t answer. And don’t forget the millions of self-employed Canadians. They will not feel kindly towards anyone who foists an increase on them because they don’t have an employer to stick half the premium with. They get to pay 100%.

• Reverse Robin Hood
It’s universal so working poor will take home less income so rich retirees will get more

• Pensions will adjust
More CPP benefits mean that pensions will be motivated to reduce their payout

• Bad social policy
Discourages self-reliance, accountability, saving and planning

• Loss of flexibility and options
Unlike personal savings, you can’t decide what sort of savings vehicle is best suited for your specific needs and temperament. Along with that complete abdication of control, you lose the option of dipping into your savings on a rainy day because there is absolutely no way to access your CPP savings to provide necessities of life if you lose your job, to buy a home or pay for education for you or your children. If you have saved adequately and you’ve determined that you don’t need more for your retirement you will continue to be forced to make contributions instead of going on vacation, buying a rental property or buying that “toy” you’ve always wanted.

• Diversification of savings
Is it smart to put even more of our eggs in one basket? Common sense dictates that we should diversify more instead of putting more in CPP? Diversification of managers is as important as diversification of assets. And there comes a point where an investment fund can become too big. With additional size comes less flexibility and nimbleness. Gargantuan positions in securities cannot be changed with the speed of much smaller funds. And an even bigger CPPIB could distort markets especially small ones like Canada – if CPPIB investment managers favour one sector over another, it could hurt un-favoured economic sectors in our economy.

• Estate value
When you own your own savings you can pass any leftover assets to your heirs. Not so with CPP. There are small spousal and dependant benefits and a very small death benefit but that’s it. There are no guarantees that you or your loved ones will receive back even 100% of what you’ve contributed.

• Red Herring, “conventional wisdom” issues that cloud the discussion

• “Excessive fees of retail investment choices”
The myth that Canadian mutual funds are higher than other jurisdictions has been busted. It’s simply not true (Hallett & Rothery). There is a cost associated with mutual funds though and if anyone doesn’t think they’re getting good value for the fees there are plenty of low cost options including ETFs and GICs.

• “Canadians can’t save”
How is it that if people cannot find a way to put aside anything in savings they will be able to afford more CPP contributions? Is it merely a discipline issue? Then let those without discipline sign themselves up for CPP at a level of their choice and let others opt out? And if self-discipline is a problem, mutual funds with deferred sales charges and a professional advisor’s advice and coaching will help to keep people on course and resisting the urge to let their emotions drive the bus. This is where those fees with mutual funds become very cost effective. To paraphrase the Mastercard commercials – Helping people stay the course with their investments…. Priceless.

• “Mutual funds are too risky”
The CPPIB invests in publicly traded stocks and bonds just like mutual funds. Why is one fund risky but the other is not?

• “CPP benefits are guaranteed”
Well yes and no. If markets don’t co-operate or demographic projections don’t play out as planned, the only way to continue to pay out at promised levels is to increase the premiums. It’s not magic. Any perceived guarantee depends on our willingness to prop up the plan.