MEECH LAKE, Quebec ? A growing number of provinces are calling for an enrichment of the Canada Pension Plan, but it appears doubtful the country?s finance ministers will find consensus to proceed with CPP reforms as they meet on Monday.
Boosting CPP, federal transfers to the provinces, the possibility of a national securities regulator and skills training are some of the major themes on the agenda for the federal, provincial and territorial finance ministers.
Bank of Canada Governor Mark Carney will deliver a presentation to ministers on the state of the Canadian economy, while they?ll also discuss what impact the looming ?fiscal cliff? in the United States ? a combination of $600 billion worth of tax hikes and spending cuts set to take effect beginning Jan. 1 ? could have on Canada.
A number of provinces are urging the federal government to modestly and gradually increase CPP contributions 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.
The federal government and a handful of provinces are worried that increasing CPP contributions at the current time would slap an additional financial burden on employers during a fragile economy and threaten their ability to hire workers.
Federal Finance Minister Jim Flaherty says he wants consensus from all provinces before boosting CPP contributions, even though the support of only two-thirds of the provinces representing two-thirds of the population is actually needed to proceed.
But provinces like Ontario believe there?s enough support for CPP reforms and that the federal government should introduce legislation to boost contributions to help Canadians save for their retirement.
?I think it would be a mistake for a federal government to (stop it),? Ontario Finance Minister Dwight Duncan told reporters Monday, on his way into meetings at Meech Lake.
?If it?s the will of the provinces, based on the equations that are all agreed to in the act, I think that would be a mistake. I think it would be a mistake to essentially give every province a veto on any important matter ? that?s effectively what you?re saying here.?
There?s a need to move on the file because a substantial number of Canadians, especially middle-income earners, are not saving enough for retirement, he said.
Duncan is confident enough provinces are onside to proceed with enriching CPP and he hopes the federal government ?would see the wisdom? in enhancing the pension plan. However, he said it?s unlikely all jurisdictions will agree to changes during Monday?s meeting.
?You have to agree to change. I?d like to do that today, but I doubt we?re going to get there,? he added.
Quebec and Alberta both previously opposed enriching CPP, believing pooled registered pension plans were a better option. But the new Parti Quebecois government says it?s now open to enhancing CPP contributions, although by how much remains an open question.
?The terms of the improvements in the CPP are yet to be negotiated. There?s no consensus as far as I understand regarding the size of the improvement of the CPP, so that?s one thing that has to be figured out,? Quebec Finance Minister Nicolas Marceau said Monday. ?We?re open to it.?
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, while the average monthly payment in 2012 (at age 65) was approximately $528, and the maximum monthly payment was about $987.
Late Sunday, on his way into dinner with his provincial counterparts, Flaherty said it?s unlikely finance ministers will find consensus this week on changes to the Canada Pension Plan.
?I think what we will (see) happen at our meeting is that we?ll have a discussion on the CPP issue and that it will not be resolved because there?s not a consensus,? Flaherty told reporters.
?Having said that, you know, I think that there?s room when we have significant economic growth to perhaps increase the CPP contributions, but not now.?
Ministers are expected to discuss possible CPP changes such as increasing maximum pensionable earnings, boosting the maximum benefits that can be paid out and potentially phasing it in over a decade.
Boosting CPP benefits, however, would require increasing premiums paid by Canadians. All adult working Canadians must pay into CPP, with workers and employers each paying half of the contributions.
New Brunswick Finance Minister Blaine Higgs, like Flaherty, believes there?s an opportunity to proceed with CPP reforms at some point, but he?s concerned about moving too quickly during challenging economic times.
?The economic conditions have to be right. And in New Brunswick, we have some issues there that we?re certainly trying to move our economy forward,? Higgs said Monday.
?We have to understand the impact that it?s going to have in relation to how modest it could be put forward, and what timeframe?and understand clearly what it could look like. We can?t do it in any quick fashion. And that?s our concern.?
jfekete@postmedia.com
Twitter.com/jasonfekete
Source: http://o.canada.com/2012/12/17/finance-ministers-at-odds-over-cpp-reform/
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