Canada scores poorly among developed countries in providing public pensions to seniors, according to an internal analysis of retirement income by the federal government.
And voluntary tax-free savings accounts or TFSAs, introduced by the Harper Conservatives in 2009, are so far unproven as a retirement solution and are largely geared to the wealthy.
Those are some highlights of a broad review of Canada's retirement income system ordered by the Privy Council Office and completed in March this year by the Finance Department, with input from several other departments.
The research, compiled in a 30-page presentation deck, was created as the government came under fire from opposition parties, some provinces and retiree groups for declining to improve Canada Pension Plan or CPP payouts through higher mandatory contributions from workers and businesses.
The CPP issue has already become acrimonious in the federal election campaign, with Conservative Leader Stephen Harper saying on Aug. 11 that he is "delighted" to be making it more difficult for Ontario to launch its own version of an improved CPP. The federal Liberals are hoping to use Harper's clash with Ontario Liberal Premier Kathleen Wynne over pensions to win seniors' votes in the province and beyond.
A heavily censored copy of the internal document was obtained by CBC News under the Access to Information Act.
The review acknowledges that Canada trails most developed countries in providing public pensions, and is poised to perform even worse in future.
Low among OECD countries
"In 2010, Canada spent 5.0 per cent of GDP on public pensions (OAS/GIS and C/QPP), which is low compared with the OECD (Organization for Economic Co-operation and Development) of average of 9.4 per cent," it noted.
"The OECD projects that public expenditure on pensions in Canada will only increase to 6.3 per cent of GDP by 2050 – much lower than the 11.6 per cent of GDP projected for OECD countries on average."
The document also says Canada's public pensions "replace a relatively modest share of earnings for individuals with average earnings" compared with the OECD average of 34 countries; that is, about 45 per cent of earnings compared with the OECD's 54 per cent.
"Canada stands out as one of the countries with the smallest social security contributions and payroll taxes."
The Harper government since at least 2013 has resisted repeated calls to enhance CPP, saying proposed higher premiums for businesses could kill up to 70,000 jobs in an already stagnant economy. Instead, the government has promoted voluntary schemes, such as pooled pension plans for groups of businesses, as well as TFSAs.
The document notes that participation rates for TFSAs rise with income, with only 24 per cent of those making $20,000 annually or less contributing, compared with 60 per cent in the $150,000-plus bracket.
The review also acknowledges "it is still too early to assess their effectiveness in raising savings adequacy."
Much of the document is blacked out under the "advice" exemption of the Access to Information Act, including a section on policy questions. The research may have underpinned a surprise announcement in late May by Finance Minister Joe Oliver that the government was considering allowing voluntary contributions by workers to their CPP accounts.
The review takes issue with Statistics Canada's data showing a sharp decline in personal savings by Canadians since 1982, arguing that when real estate and other assets are factored in, savings are as high as they have ever been. "Taking into account all forms of private savings suggests no decline in the saving rate over time."
The provincial minister in charge of implementing the Ontario Retirement Pension Plan, the province's go-it-alone CPP enhancement, says the internal review shows Harper is ignoring hard evidence.
"This document is further confirmation that Stephen Harper is continuing to bury his head in the sand," Mitzie Hunter, associate minister of finance, said in an interview. "CPP is simply not filling the gap. … It's unfortunate that Mr. Harper has really chosen to play politics rather than address serious concerns for retirement security in Canada."
"TFSAs, which Harper touts as a cure-all, are really untested and they're only really benefiting the wealthiest Canadians."
Susan Eng, executive vice-president of CARP, which lobbies for an aging population, said the review cites evidence that single seniors are especially vulnerable to poverty, and that young Canadians and the middle class are not saving enough.
"The government repeats that mandatory employer contributions would be 'job-killing payroll taxes' despite the briefing clearly stating that Canada's social security contributions and payroll contributions are amongst the lowest among similar OECD countries," she said.
But Harper spokesman Stephen Lecce argues the document also found Canada compares well with other OECD countries on income replacement, ranking third; and that the poverty rate for Canadian seniors is among the lowest in the industrial world.
Lecce also cited a series of measures, including boosting Guaranteed Income Supplement payments and introducing income splitting for pensioners, that together have removed about 380,000 seniors from the tax rolls since 2006.
"Our position is clear, consistent with our Conservative government's efforts to encourage Canadians to voluntarily save more of their money, we are consulting on allowing voluntary contributions to the Canada Pension Plan."