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Canada Pension Plan

Overhaul the broken Canada Pension Plan with a new Personal Income Security Account.

A Personal Income Security Account would provide a portable investment portfolio, vested in the name of each worker, for health, employment and retirement income.

This plan was proposed for Canada in 1980 by a Christian politician, Dr. Robert N. Thomson. It was rejected by Parliament, but a few years later it was adopted by Chile. Chilean workers at that time were given the option of continuing on the tax-funded pension plan, or going on the new investment plan. Those who chose the investment plan are now retiring wealthy — and Chile has become an economic powerhouse in Latin America because of the pools of investment created.

How will this plan work?

Beginning with an individual’s first job, they and their employer would contribute to the plan as a source deduction, just as we do now with CPP and EI, and in Ontario, the Health fund.

Beginning with one’s first job, 10% of an individual’s income would begin to accumulate in his or her account: 5% contributed by the employee and 5% by the employer.

In the event of some unforeseen circumstance, like unemployment or illness, the individual would be allowed to withdraw up to 15% per year of what had accrued in the account. After that, government assistance would meet the needs of any individual or family.

The account would never be completely depleted, but would continue to grow.

Welfare, disability and healthcare would continue to be government programs. We will always have what we may call “the deserving poor”, and we must care for them with the utmost compassion.

It is no secret that in Canada we also have serious abuse of our social systems. The undeserving poor, those who would choose to abuse the system and thereby the taxpayer, will be motivated—for example, in the case of unemployment—to find new employment quickly so as to use as little as possible of the allowable 15% of their account. As a party we believe very strongly in individual responsibility and accountability, but not disproportionately to compassion.

This policy would inculcate an ethic of individual responsibility in the majority of people, reduce payouts as a result, and therefore allow us to care of the truly unfortunate much better.

The experience in Chile has been an overwhelming success, and voters would do well to seriously consider the CHP’s better solution for the looming CPP crisis.