Former Ontario finance minister Dwight Duncan has come out against the idea of launching a separate provincial pension plan, currently under consideration by the Liberal government he left earlier this year.
In an interview on Tuesday, Mr. Duncan expressed frustration with the federal government’s reluctance to enhance the Canada Pension Plan. But he dismissed the idea that the looming shortfall of retirement savings among middle-income Canadians is a “crisis” and called for the provinces to work patiently together to build consensus toward increasing CPP premiums and payouts.
“I think it would be a mistake to proceed with an Ontario-only supplementary plan,” Mr. Duncan said. “If it’s a bargaining position that’s one thing, but I think we’re far enough along nationally with the concept of an enhancement.
“The cost, the time associated with setting up a supplementary plan – it would probably be three or four years before you had it in place,” he added. “It would be very costly, and it could in fact undermine the Canada Pension Plan.”
Now a senior strategic adviser at the law firm McMillan LLP, Mr. Duncan was speaking in advance of a speech he will deliver on Wednesday to the C.D. Howe Institute. In it, he will argue that in addition to bolstering CPP, governments should provide opportunities to large pension funds – such as the Ontario Teachers’ Pension Plan, the Ontario Municipal Employees Retirement System and the Healthcare of Ontario Pension Plan – to invest in public assets and in future ones such as new public-transit lines.
“They are making huge investments around the world, and I think it would be wise for governments at all levels to pursue how we can engage them more actively,” he said in the interview.
Mr. Duncan also took an indirect shot at Ontario’s opposition Progressive Conservatives, defending the public-sector pension plans that they have argued should be shifted from relatively generous defined benefits to defined contributions, as has happened through much of the private sector.
“In spite of the challenges we’ve had with defined benefit plans, we should be looking for ways to make them workable as opposed to preying on what I call pension envy, and try to figure out more ways to get better arrangements for a broader number of people,” he said.
Still, it is Mr. Duncan’s criticism of the pension idea being contemplated by his former colleagues that is likely to draw the most attention.
As reported last week, Kathleen Wynne’s government is expected to hint in next month’s Fall Economic Statement that it will take action of its own if a December meeting between federal Finance Minister Jim Flaherty and his provincial counterparts does not make progress toward CPP enhancements.
In order for a provincial plan to work, government sources have told The Globe and Mail, it would likely need to involve mandatory contributions by businesses and their employees. It would be the first of its kind to be introduced by a province in addition to CPP.
If the Liberals decided to move forward, it would be a centrepiece of their campaign platform in a provincial election widely expected next spring.
Skepticism about the idea is shared by Don Drummond, the former bank economist appointed while Mr. Duncan was treasurer to review the province’s finances. But although Mr. Drummond said in an interview last week that he considers separate provincial plans “definitely in the second-best world,” he acknowledged they would be better than nothing if Ottawa is unwilling to move on CPP.