Ontario Finance Minister Dwight Duncan says efforts to expand the Canada Pension Plan are losing steam – especially at the federal level – even though Ontario still believes the reform would help Canadians who aren’t saving enough for retirement.
In a meeting Wednesday with The Globe and Mail’s editorial board, Mr. Duncan said he has been disappointed that the Conservative government in Ottawa appears unwilling to push for a modest increase to the CPP to help middle-income Canadians.
“The feds are just not interested – they cancelled the meeting we were supposed to have in June,” he said.
He added that there “appears to be less interest in that now than there was four or five months ago.”
Ontario has been championing an expansion to the CPP as a key step toward pension reform, but has also supported another federal proposal to create new voluntary savings programs known as pooled registered pension plans (PRPP), aimed at the 75 per cent of private-sector workers in Canada who do not have a workplace pension plan.
Federal Minister of State for Finance Ted Menzies said Monday the PRPP plan has the support of all the provinces and is moving into the next phase of legislation to enact the program. The plans will be offered by employers on a voluntary basis, and will see contributions managed by private investment firms to earn a return for workers in retirement.
Mr. Menzies said Monday the CPP expansion proposal has “not been taken off the radar screen” but said provincial ministers have agreed the PRPP is the best way forward for the time being, and “the fastest way to get to the position we want to be in.”
Bram Sepers, spokesman for Mr. Menzies, said Wednesday there has been opposition to proposals to expand the CPP, which would require an expansion of premiums paid by workers and employers.
“Several provinces and key stakeholders, including small businesses, have raised serious concerns about raising CPP premiums in today’s fragile economy,” Mr. Sepers said.
He said Mr. Menzies has asked for meetings with each of the provincial finance ministers over the summer to discuss retirement issues, especially the PRPP proposal, and said Mr. Duncan is the only one who has refused.
Mr. Duncan told The Globe that Ontario still believes the PRPP plan should be supplemented with an additional expansion of the CPP, which is mandatory for workers and pays a guaranteed level of pension benefit in retirement. He said the fact there is $900-billion in unused RRSP contribution space in Canada suggests many people don’t take advantage of voluntary savings options.
Mr. Duncan said he thinks expanded CPP would help governments down the road that are facing growing health care burdens from an aging population. Costs for long-term care homes, for example, are extremely expensive for seniors, and Mr. Duncan said many people are not saving enough today to cover those expenses.
Higher CPP payments in retirement would help more people afford those obligations, he said. Experts have also argued that one of the merits of expanding CPP would be that it would reduce Old Age Security (OAS) payments for some Canadians because OAS is clawed back as retirement incomes climb.
“If I were the federal government, I would be worried about [Old Age Security] tripling in the next 10 to 15 years, because it’s going to, and that’s [paid] out of general revenues,” Mr. Duncan said.
