CIBC CEO calls for additional, voluntary contributions to CPP to reignite culture of savings

CIBC CEO calls for additional, voluntary contributions to CPP to reignite 
culture of savings 
CIBC research shows nearly 6 million Canadians are at risk of a significant 
decline in standard of living when they retire 
TORONTO, Feb. 20, 2013 /CNW/ - Canadians should have the choice to make 
additional, voluntary contributions to the Canada Pension Plan in order to 
avoid facing a significant decline in living standards when they retire, said 
Gerry McCaughey, President and CEO of CIBC in a keynote address at the 
National Summit on Pension Reform. 
He told the audience of senior government and business leaders in Fredericton, 
New Brunswick that, according to new research conducted by CIBC's economics 
group, nearly 6 million Canadians will face a drop in living standards of more 
than 20 per cent if current savings rate trends continue. 
"Our research found some 8.4 million people will experience a decline of more 
than five per cent in their standard of living at retirement," said Mr. 
McCaughey. "Far more troubling is the fact that 5.8 million Canadians are on 
pace to experience a significant decline - meaning a reduction in living 
standards of more than 20 per cent. 
"And, here is perhaps the most alarming takeaway: when we look at those 5.8 
million people - we see that most of them are young. In fact, our economists 
estimate that almost 60 per cent of adults in their late 20s or early 30s, can 
expect to experience a significant decline in their standard of living when 
they retire." 
Mr. McCaughey noted that many of these young Canadians - especially those with 
lower incomes - can't afford to buy the average home, so they will also be 
deprived of the benefits of the forced savings represented by home ownership. 
They're also coming of age in an era when private pension plans are 
increasingly scarce. And they're finding it hard to replace what those private 
plans offered: scale, obligatory participation, expert investment management, 
locked-in contributions, a long-term horizon and certainty of outcome. 
Mr. McCaughey thinks five imperatives should be incorporated into any 
retirement savings solution: 
1. It must be easy to understand and simple to participate in.
  2. It needs to put the money of Canadians to work over the longest 
 possible horizon - as much as 40 years or more - to maximize 
 returns and grow savings.
  3. It needs to be voluntary, but committed savings so after an 

     individual opts in annually, the money can't be touched until
     retirement, giving it every opportunity to grow. These additional,
     voluntary contributions would come from after tax income, similar
     to the TSFA, and when withdrawn at retirement would neither be

 taxable nor result in a loss of income tested benefits.
  4. It needs to provide a predictable income stream at retirement- 
 providing a date-certain, amount-certain return to Canadians at 
 the conclusion of their working years.
  5. It needs to take advantage of the benefits of scale - and the 

     incremental returns that are available from accessing high-quality
     investment management that operates within a low cost structure
     due to its size and scope.

Mr. McCaughey believes the Canada Pension Plan or a CPP-like vehicle can 
deliver on all of these imperatives. "I believe that a reasonable starting 
point, benefitting the greatest number of individuals, would be to allow 
Canadians to increase their contributions to the CPP," says McCaughey. "We 
need to provide Canadians with further choice - choice that gives them date 
certainty and real dollar amount certainty. A choice that will help Canadians 
as individuals, and Canada as a nation, reignite a culture of savings."

CIBC research shows that such a solution would help close the retirement 
savings gap for young Canadians by as much as 80 per cent.

A copy of Mr. McCaughey's speech is available at:

The CIBC World Markets Economics report is available at:

CIBC is a leading North American financial institution with nearly 11 million 
personal banking and business clients. CIBC offers a full range of products 
and services through its comprehensive electronic banking network, branches 
and offices across Canada, and has offices in the United States and around the 
world. You can find other news releases and information about CIBC in our 
Press Centre on our corporate website at

Kevin Dove, Head of External Communications at 

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CO: Canadian Imperial Bank of Commerce
ST: Ontario

-0- Feb/20/2013 12:30 GMT

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