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CANADIAN HR REPORTER October 17, 2016 INSIGHT 19 Why expanding the CPP is a bad idea In my 22 years working for one of Canada's largest business associations, I've seen a fair amount of healthy disagreement about important matters of economic and social policy. Bank mergers. Cor- porate taxation. Minimum wage. La- bour legislation. e list goes on. Each of these issues comes with boosters and detractors, yet they typically develop alongside a ro- bust, well-informed and detailed public and political conversation, outlining the pros and cons, the potential impacts, costing, expert analysis and consultations. Whether or not we agree with the eventual outcomes on these and other policy issues, we respect the process of policy development when it's open, accountable and informed by evidence. Unfortunately, one of the big- gest public policy changes in recent history — expanding the Canada Pension Plan (CPP) — is breaking with almost all of these steps. e end result is a misun- derstood, flawed policy set to cause no small degree of harm to employers and workers alike. The Canadian Federation of Independent Business (CFIB) is opposed to the CPP expansion plan as it is currently constructed. From its very premise to its touted promise, this is a really bad deal for Canadians and an even worse deal for businesses, especially small- to medium-sized enterprises, which represent the lion's share of eco- nomic activity in Canada. Here are a few overarching themes that demonstrate why we should think twice about CPP expansion: It's bad business policy Just as regulations and red tape disproportionately affect small businesses, payroll taxes are borne more heavily by smaller employers. In fact, our members consistently say payroll taxes are the number one most-harmful form of taxation to their fi rm. While supporters of the CPP hike frame it as modest and incon- sequential, small business owners say this is anything but true. When you extrapolate the numbers across a workforce, in extremely competitive industries or in sec- tors with tight profi t margins, the harm is clear enough. Small fi rms tend to be more payroll-intensive than their larger capital-intensive business counterparts. Whereas a larger business may be able to ab- sorb this higher cost by off setting it in other parts of the operation, a small business has fewer options. Raising prices in a tough economy is often not an option at all if the goal is to keep customers. Make no mistake: in an ever- competitive global marketplace and with a sluggish domestic economy, a healthy business en- vironment is fostered by policy that encourages growth and in- vestment, not one that serves as a disincentive for both. CFIB research and member surveys capture the likely nega- tive eff ects of a CPP hike: frozen or lower wages (69 per cent of small businesses), reduced investment (50 per cent), layoff s (37 per cent) and tough decisions on existing benefi t packages for employees (28 per cent). Does CPP really help? While there is no doubt some Canadians are not saving enough for their own retirement, is the answer to require all of us to save more? Increasing CPP does noth- ing for those who cannot aff ord to save more as CPP is not a gift. It requires people to take more money out of their income today, for their potential benefi t tomor- row. And for lower-income Cana- dians who struggle the most, they will lose some of their paycheques immediately, without any mean- ingful increase in benefi ts when they retire, as other government supports (such as the Guaranteed Income Supplement) are then clawed back. And it must be remembered not a single current retiree will get another nickel from CPP ex- pansion, as the increased benefi ts must be phased in over 40 years. People over 50 will likely receive next-to-no additional benefits as well, given the decades-long benefi t expansion period, which doesn't even start until after 2019. Canadians don't fully understand Many Canadians don't really ap- preciate what they're signing up for with respect to the CPP, ac- cording to a poll by Ipsos and CFIB. For example, about 40 per cent of employed Canadians think the government kicks in CPP con- tributions, which is not the case. In fact, when presented with the prospect of wage cuts (a dis- tinct possibility, according to our research), 83 per cent of employed Canadians say they don't support CPP expansion. The same poll found 80 per cent support the idea of govern- ment consultations on the plan, although British Columbia is the only province thus far to take feedback from the public. The stunning lack of public awareness about this plan is rea- son enough to give us pause and it virtually demands a period of broad, inclusive consultation. ere are better options A mandatory CPP hike is often presented as the best way for Ca- nadians to save for their retire- ment. But from a strictly fi nan- cial perspective, any wise inves- tor would laugh at putting more money towards the CPP, since the rate of return is forecasted to be a miserly 2.1 per cent for those born after 1972. Furthermore, a 2015 Ipsos- CFIB poll found that, of the vari- ous retirement savings vehicles available to Canadians, a manda- tory increase in CPP contribu- tions was one of their least fa- voured options. It also bears mentioning that "savings" these days means much more than a pension or RRSP. Many people have significant assets in real estate or private in- vestments, to say nothing about the massive intergenerational wealth transfer as boomers pass much of their wealth to their children. We've advocated for additional voluntary contributions to the CPP, and voluntary pooled regis- tered pension plans are soon to be on the market in half of Canada. Canadians appreciate choice in how they invest their hard-earned money. If additional CPP contribu- tions are such a great idea, it only makes sense to entrust Ca- nadians to make this choice on their own terms, and not force them to cough up more off their paycheques when they say they have little ability to save as things stand. e weeks and months ahead promise interesting times on Parliament Hill. Fortunately, the governments of B.C. and Quebec have not yet signed on, both opt- ing to embark upon public consul- tation before making a decision. We commend them on that. Sadly, the federal government has chosen to disregard its own 2016 budget promise to under- take national consultations. e proposal to expand the CPP needs to be revisited, and we're rapidly running out of time. Dan Kelly is president and CEO of the Canadian Federation of Independent Business (CFIB) in Toronto, one of Canada's largest associations of small and medium-sized businesses with 109,000 members across every sector and region. For more information, visit RetirementReality.ca. Inviting non-employees to company events Should invitations be extended to employees' friends and families? Question: A number of our employees have approached us saying they would like to bring a guest or partner with them to com- pany social gatherings, retreats and awards ceremonies. is can be a bit awkward. What are best practices relating to the extension of invita- tions to non-employees for events? Answer: e answer to this ques- tion depends on a number of dif- ferent factors, including the na- ture, purpose, timing, duration, location and costs of the event and the policies, resources, culture and values of the organization. It also depends on whether the event is being held during work time or after hours and whether it is held on the premises or off -site. While a holiday party is prob- ably the type of event where employees should be allowed to bring a guest and an off -site work- ing session is likely best limited to employees, a team-building event held during working hours would likely best be restricted to employees only. In fact, anything purely work-related, information- al or confi dential in nature should probably be limited to internal attendees. Concerts, sporting events On the other hand, some organi- zations provide employees with tickets to events that are designed purely for amusement, so the availability of tickets to non-em- ployees depends on why the event is being off ered in the fi rst place. Are tickets being provided for en- tertaining clients or as a perk and reward for a job well done? Unless a special event (such as a private concert) is set up by an organization solely for employ- ees and is designed to enhance employee morale and engage- ment, or to facilitate marketing and branding eff orts by mixing entertainment with the provision of promotional company infor- mation and team-building activi- ties, employers should consider allowing employees to bring one or more guests with them. Where employers are only able to provide a limited number of free or subsidized tickets, they may consider allowing employ- ees to bring only one guest or al- low them to purchase additional tickets for their friends and fam- ily members (either at regular or discounted prices, likely up to a maximum number). is is particularly important where employees are required to work long hours, travel exten- sively or spend extended periods of time away from their families. People like to spend time with their friends and families, and they may feel less enthusias- tic about attending an event on their own or solely with work colleagues. Attending a sporting event or concert may be more enjoyable if employees are able to have the people closest to them accompany them, and the organization will likely be thought of more posi- tively for its generosity. Tips, strategies Here are some tips and strategies for dealing with this issue: • Consider establishing an em- ployee committee with a fund employees pay into for the pur- poses of providing free or dis- counted tickets to events and activities. • Determine what to do with con- tractors and agency employees. Consider allowing them to at- tend events as well — either on the same terms or by purchasing tickets (perhaps at a discount). • Don't forget employees in com- mon-law and same-sex relation- ships when extending invitations. Similarly, allow single employees or those who aren't in a relation- ship to bring a guest (don't restrict invitations to spouses, partners or signifi cant others). • Consider allowing employees to have a spouse, partner, family member or friend accompany them on business trips (at their own expense with respect to travel arrangements and food) and share accommodations where possible. • Determine whether it makes sense to allow employees to bring one or more guests to awards ceremonies, retirement gather- ings, milestone celebrations or other special events. is is par- ticularly important in the case of award winners, inductees or guests of honour. • Consider off ering company dis- counts to events and activities through a rewards and recogni- tion provider. • Avoid restricting holiday par- ties and other after-hours events that are purely social to employ- ees only. If cost is an issue, con- sider charging guests for a ticket (and perhaps employees as well, although the cost of tickets may be subsidized). • Develop policies relating to spe- cifi c types of events. Be transpar- ent in any communications with employees regarding company events that are restricted to in- ternal invitees only, and explain the rationale for not allowing them to bring guests. Brian Kreissl is the Toronto-based product development manager for Carswell's human resources, OH&S, payroll and records retention products and solutions. Brian Kreissl ToUghest HR QUestion The rate of return is expected to be 2.1 per cent for those born after 1972. In my 22 years working for one of Canada's largest business associations, I've seen a fair amount of healthy disagreement about important matters of economic and social policy. Bank mergers. Cor- porate taxation. Minimum wage. La- Dan Kelly GUest CoMMentarY

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