Flaherty may be open to CPP boost
Finance minister wants provincial consensus first
Finance Minister Jim Flaherty says now is not the time to enrich the Canada Pension Plan and that he wants consensus from all provinces before boosting it, but many of his provincial counterparts are urging him to modestly increase CPP even if there’s no unanimity.
Increasing CPP contributions for Canadians, renewing the federal equalization program, skills training and the possibility of a national securities regulator are some of the main issues on the agenda when Flaherty meets provincial and territorial finance ministers Sunday and Monday in and around Ottawa.
Flaherty is expected to deliver a presentation or make an announcement on possible equalization changes, albeit potentially minor tinkering, according to at least one finance minister.
The ministers are scheduled to hold a working dinner Sunday night in Ottawa before a full day of meetings Monday in Meech Lake, just across the border in Quebec.
A number of provinces are urging the federal government to modestly and gradually increase CPP contri- butions in the coming years to help Canadians better save for retirement. An enriched CPP would complement the new Pooled Registered Pension Plans — a private-sector pension option to boost retirement savings — that is endorsed by the Harper government.
Flaherty said Friday the federal government is concerned about increasing CPP contributions at this time because it would slap an addi- tional financial burden on employers during fragile economic times, potentially threatening their ability to hire workers.
The federal government can’t unilaterally change the CPP; amending it requires the backing of two-thirds of the provinces representing twothirds of the population.
“This is not the time to put another burden on employers and dampen employment prospects for Canadi- ans. That’s my view. Not everyone agrees with that view,” Flaherty told reporters Friday in Ottawa.
“We’ll see collegially whether there’s a consensus or not. I would not want to move ahead … without everyone being on board. It’s quite important in the federation that if we’re going to do something fundamental with respect to the Canada Pension Plan we really try to do it all together.”
It is estimated six in 10 Canadian workers in the private sector have no private pension plan, while approximately only one-third of Canadians make contributions to registered retirement savings plans.
A number of provincial governments believe modestly enriching CPP is necessary if Canadians are to have a comfortable nest egg for retirement.
Ontario won’t support PRPPs unless the CPP is enhanced. Manitoba says the federal government should boost the CPP if there’s two-thirds support, even if all provinces and territories aren’t necessarily onside.
“I don’t think a pension approach can be comprehensive without a modest increase to the Canada Pension Plan,” Manitoba Finance Minister Stan Struthers said.
“If we have an agreement on some of the options and two-thirds are on board, I think we should move ahead,” he added.
Flaherty acknowledged that gradually phasing in increases in CPP contributions is one option and “a reasonable position to take.”
The Canada Pension Plan is designed to replace about 25 per cent of a person’s employment earnings (up to a maximum amount) once they reach retirement at age 65. The current maximum pensionable earnings for CPP is $50,100,
Ministers are expected to discuss possible changes such as increasing maximum pensionable earnings, boosting the maximum benefits that can be paid out and potentially phasing it in over a decade.