Canadians misinformed on CPP expansion, seek government consultation

An Ipsos-CFIB public opinion poll shows that 70% of employed Canadians oppose a CPP hike if it means a wage freeze.

The poll also found that a majority of Canadians are uninformed about basic details of CPP and how the proposed expansion of the public pension plan will work.

For example, nearly 40% of Canadians think the government pays for part of the CPP (only a quarter realize this is false); over 70% of Canadians don’t realize that current retirees get nothing from the proposed CPP expansion (one-quarter of current retirees wrongly believe they will see larger CPP benefits as a result of CPP expansion).

Other poll highlights

  • 83% of employed Canadians do not support CPP expansion if it means employers will cut their wages over the seven-year implementation period
  • Over 80% agree they want the government to consult them on plans to expand CPP

In light of these results, CFIB strongly encourages governments to offer education to Canadians and engage them in consultations before any plan to expand CPP moves forward.

Read the full poll results: Views on CPP/QPP Expansion

What can small business owners do?

  • If your business is in Quebec or BC, participate in the consultation, and let your government know that a hike will hurt you and your employees.
  • If you live elsewhere, contact your provincial finance minister and insist that your province undertake a proper consultation on CPP expansion.

Voices of opposition

In addition to the signatures on our online petition, CFIB has gathered over 50,000 paper petitions from small business owners opposed to CPP/QPP hikes and  a further 40,000 in opposition to the Ontario Retirement Pension Plan (ORPP). CFIB has met with the premier or finance minister in every province, and shared with them the business community’s strong opposition mandatory pension plan hikes.

Tell your province and the federal government to take CPP/QPP hikes off the table for good. Sign the petition.

Your views on CPP expansion and consultation

CFIB has published previous survey results that show small business owners are not buying the idea of CPP expansion as a “modest” increase.

A full 70% of small business owners disagree with the notion that the proposed CPP increase is “modest” and would have a limited impact on their businesses.

The survey results also show overwhelming demand by entrepreneurs for an opportunity to be heard. With only BC and Quebec having agreed thus far to take the CPP hike to their constituents, this new survey shows that 90% of small businesses think it’s important to have public consultations before any deal is finalized.

The online survey was conducted from August 4 to 10, 2016 and covered 3,376 responses from Canadian business owners outside of Quebec.

Another national CFIB survey of its members conducted immediately after the government announced the new CPP deal shows that 81% of small business owners want governments to start consultation and delay implementation until they’ve had a chance to be heard. See more survey results.

What does CPP expansion look like?

In a scheme that will be doubly damaging for many employees and their employers, the agreement in principle to expand CPP will not only increase the rate of contributions, it will also draw in additional income by raising the threshold on income that was previously exempted from contributions.

  • Employer and employee premiums go up, starting in 2019, from the current 4.95% of earnings to 5.95% by 2023.
  • CPP contributions will now be deducted on income up to a threshold of $82,700 (previously, the threshold was a maximum of $54,900 of a person’s income that was subject to mandatory CPP contributions).
  • Beginning in 2024, a new “Upper Earnings Limit” comes into effect, which will be set at 7% above the Yearly Maximum Pensionable Earnings level in 2024 and 14% above it in 2025 (the upper earnings limit is projected to be $82,700 by 2025). Employees and employers will pay a 4% premium on income between the two levels.
  • The new plan aims to replace 33% of income up to this higher ceiling (currently CPP is meant to replace 25% of earnings).

CFIB has filed Freedom of Information (FOI) requests with the provinces that signed the agreement, as well as with the federal government, seeking to determine whether governments did any economic impact analyses. CFIB also sent an open letter to premiers and the Prime Minister, encouraging them to share analyses they did on the CPP deal.

The signs of trouble are clear

The federal government has not committed to any further public consultations on the issue, despite the fact that polls show a low level of understanding about CPP expansion.

CPP expansion is not the favoured choice of Canadians for retirement savings. A public opinion poll and corresponding CFIB member survey on the subject found that, if given a choice, Canadian small business owners and employees both prefer RRSPs, TFSAs and personal investments over mandated CPP increases.

CFIB has been a leading voice behind calls to scrap the idea, pointing to research showing that an expanded CPP program leads to job cuts, downward pressure on wages, and the risk of business closures, especially during a time of economic uncertainty.

Mandatory CPP expansion will also lead to economic pressures: over one-third of employed Canadians said such increases will reduce their ability to spend on essential goods and services; two-thirds of small business owners said they will face increased pressure to freeze or cut workers’ salaries. 

When asked about the best way for government to help Canadians save more for retirement, only 18% of employed Canadians and 5% of small business owners chose mandatory increases in CPP contributions.