Source: The Canadian Press
Provincial and territorial finance ministers have thrown their support behind a proposal by their federal counterpart to make new private-sector pensions available to small businesses and the self-employed.
However, further talks on an expansion to the Canada Pension Plan — which six provinces and several labour groups had been pushing — will have to wait until the finance ministers meet again in June.
Federal Finance Minister Jim Flaherty called the agreement on Pooled Registered Pension Plans a “major breakthrough,” though many details have yet to be hammered out.
“They will make well-regulated, low cost private sector pension plans accessible to millions of Canadians who have up to now not had access to such plans,” Flaherty told reporters after meeting with provincial and territorial ministers in Kananaskis, Alta., Monday.
“In fact many employees of small and medium-sized business and self-employed workers will now have access to a private pension plan for the every first time.”
Flaherty said finance officials will talk with employees, employers and financial institutions in the next month to make sure the plan meets their needs.
Finance ministers from six provinces had said they were not necessarily opposed to the pooled pension idea, but they also said CPP improvements were necessary to ensure Canadians have adequate income in their retirement.
“Ontario supported the federal proposal, but we don’t think that it goes far enough,” said Ontario Finance Minister Dwight Duncan, who had been pushing a combination of the CPP enhancement and the private-sector plan.
“We’re very pleased that finance ministers today agreed to keep Canada Pension Plan reform alive.”
Before going into the meeting, Flaherty said a CPP revamp is not off the table long-term, but that the time isn’t right time to make major changes.
“Right now is probably not a good time to impose any more burdens on employers in Canada because the economic recovery is fragile. We want to continue to create jobs in Canada, so we have to be cautious and moderate in what we do, and it needs more work in any event,” Flaherty.
Alberta Finance Minister Ted Morton threw cold water on the notion that CPP changes would get much support from his province.
“It’s hard to imagine much interest in pursuing that in Alberta,” he said as he left the meeting. The province was one of three that had been critical of a CPP expansion.
Quebec Finance Minister Raymond Bachand said the pooled pension plan will be “very efficient,” especially if it’s compulsory for employers to offer the plan to their workers. It would not be mandatory for the employers to contribute to the plan, and employees would have the option of opting out.
Gil McGowan, president of the Alberta Federation of Labour, said he was disappointed a decision on CPP has been pushed out into the future.
“My big fear is that reform delayed may become reform denied, and that even though they’ve managed to get a promise that people will keep talking about CPP that the reality is that this option may be scuttled,” he said.
Earlier, McGowan said he doesn’t buy the idea that improvements to the CPP have to wait until the economy improves.
“This argument that a recession is no time to make major policy change is a red herring because there are all sorts of ways to get around those concerns,” he said.
For instance, McGowan suggested, finance ministers could agree on a policy Monday, but phase it in gradually or wait until 2012 or 2013 to enact it.
“We had a real opportunity and I think we still have one to make a game-changing policy change that will improve the lives for future generations of Canadians,” he said.
“Our hope is that the provincial finance ministers who support CPP expansion will be successful in encouraging Jim Flaherty to come to his senses and realize that his original position in support of CPP expansion is really in the broader public interest.”
While the ministers were at the meeting, protesters occupied Morton’s Calgary constituency office protesting the province’s position on the CPP.
“It’s time for Ted Morton to stop playing politics with Canadians’ retirement futures,” Nick Lepora, president of the Calgary and District Labour Council, said in a statement.
The Canadian Taxpayers Federation voiced support for Flaherty’s private-sector proposal. It said a CPP hike would only mean higher costs for small businesses.
“At the end of the day the best way for government to help Canadians save would be for them to leave more money in the pockets of taxpayers,” said federal director Kevin Gaudet.
The Canadian Restaurant and Foodservices Association also urged Ottawa not to increase CPP premiums, suggesting it would be low-income, entry-level workers who would shoulder the greatest burden.
“It is unfair to propose across-the-board increases in CPP premiums when the objective is to provide enhanced benefits for higher-income earners, who may not have adequately saved for retirement,” said president and CEO Garth Whyte.
“This approach will reduce take-home pay for lower-income employees and jeopardize jobs, particularly for youth.”
Source: The Canadian Press