The latest musings by the federal government about potentially allowing additional voluntary contributions to the CPP have re-ignited the debate about Canadians and their savings. In addition to the Conservatives shifting positions from opposing expansion to being open to voluntary expansion, the Liberals also abandoned their previous openness to voluntary expansion and now insist mandatory CPP expansion is necessary. As the backdrop to the debate, much media punditry cites as settled fact that most Canadians simply aren’t saving enough money for their retirement.

Except when we take a closer look at who isn’t saving and what constitutes “enough savings,” it actually becomes clear that we aren’t talking about the most vulnerable and poorest Canadians. Thanks to the existing CPP, combined with Old Age Security and the Guaranteed Income Supplement, widespread deprivation among seniors has been largely eliminated in Canada. Rather, what most analyses suggest is that at current rates of saving, many Canadians will not have as high an income stream upon retirement as they do while during their working years.

This of course begs the question: so what? Many Canadians may reasonably prefer to spend more now, and less later. Many people, for example, may prefer to spend more while raising a family – with a bigger house and family vacations – while downsizing to a smaller home and more modest lifestyle in their twilight years. The notion that many people are willing and ready to adjust their spending habits seems to have been lost in the discussion, and a mandatory expansion of CPP merely amounts to the government saying: we’re in a better position to tell you when to spend your money than you are. 

Even more telling is that most of the same people supporting mandatory CPP expansion are the same ones who’ve been insisting that expanded Tax Free Savings Accounts (TFSAs) are of no use to most Canadians because they can’t afford to use them. Which begs the question: then how could they afford the additional hit to their budget imposed by increased CPP premiums? And this is without even getting into the consequences to businesses of CPP premium hikes: as with all increased costs, it’s hard to see how there wouldn’t be at least some detrimental impacts on the viability or at least the ability to employ more Canadians for some businesses.

At the very least, a voluntary scheme – both for Canadians and their employers – would do less harm than a mandatory premium hike. But forcing them into an expensive, one-size-fits-all option would certainly be ill-advised. Whatever the good intentions of such a scheme, Canadians and their families are better placed than the government to make the planning and investment decisions that are best for their unique circumstances.

In short, CPP expansion is a solution in search of a problem – and considering the sobering record of most governments across Canada when it comes to debt and spending, perhaps they should get their houses in order before proclaiming themselves to be experts at planning for our financial future.