The analysis, Evaluating the Proposed Ontario Pension Plan, spotlights the cost to individuals, families and the
"The government's proposal to mandate higher household saving with more mandatory pension taxes will cost millions of Ontarians thousands of dollars," Cross said.
The proposed plan requires workers to contribute 1.9 per cent of their earnings up to
According to economic theory and extensive literature on pension trends, to pay for their half of the mandatory contribution, employers will cut future wages or other benefits.
"Unless there's an increase in productivity, employers can't suddenly increase compensation to employees unless they raise prices in an increasingly competitive marketplace. However you slice it-lower wages and less hiring, or higher prices at the till-it's bad news for
Cross finds that the plan is based on a fundamental faulty assumption; Ontarians don't save enough for retirement. In reality, Ontarians boast an above-average saving rate, at times double that of the rest of
Aside from a new costly pension plan, what would improve the retirement savings of Ontarians?
"The best way to increase savings is to foster strong income growth, which allows both spending and saving to increase. Yet the proposed
Finally, Cross notes flaws in the proposed plan's pension fund, which will be very large, with investments concentrated in fewer areas than an individual's portfolio.
"Its sheer size and concentration will leave the fund vulnerable to a spectacularly poor investment decision, like what happened to the Quebec Pension Plan in 2007, potentially offsetting any gains made by low fund management costs," Cross said.
FOR FURTHER INFORMATION PLEASE CONTACT: MEDIA CONTACT:
Philip CrossCommentator, Fraser Institute(613) 809-1544 firstname.lastname@example.org For more information: Mark HasiukMedia Relations Specialist, Fraser Institute(604) 688-0221 ext. 517 email@example.com Source: The Fraser Institute