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It found that with each percentage point increase in the total CPP contribution rate, the private savings of the average Canadian household dropped by 0.895 percentage points.

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The justification for the new pension plan, outlined in the Ontario Retirement Pension Plan Act — which was passed in the spring and is set to be implemented in 2017 — is that, “a significant portion of today’s workers are not saving enough to maintain their standard of living when they retire.”

As we have previously argued on this subject, however, the claim that retirees are not sufficiently funded — both with savings and existing pension benefits — is dubious. Indeed, a wealth of evidence suggests that a majority of Ontarians are saving enough through private and public investment vehicles to maintain their standard of living through retirement. On this ground alone, we should be skeptical of the Wynne government’s proposal.

But the Fraser report goes further in demonstrating that the fruit of more government-mandated savings schemes — which is what the Ontario Pension Plan will effectively be — would likely be offset in private savings. At least this is what happened before, according to the study, when mandatory increases to Canada Pension Plan (CPP) contributions came into effect in the late 1990s.

With each new percentage point of earnings mandated for contribution, the report finds, there was a “substitution effect,” namely a 0.895 per cent drop in voluntary savings. In other words, an additional dollar contributed to the CPP led to a proportionate decrease in the average household’s private savings. If such findings prove consistent with the implementation of this provincial plan, then the entire exercise will be a waste, leading to greater government control over retirement savings than is currently the case.