Ontario is seeking to vastly expand its proposed pension plan, aiming to create a new nationwide retirement savings system.
The province announced plans to set up its own pension late last year after Ottawa rebuffed an attempt to expand the Canada Pension Plan. Now, Ontario is asking the rest of the country to join it, which would effectively produce a second national pension plan, alongside CPP – albeit one controlled jointly by the provinces and territories.
Ontario Finance Minister Charles Sousa made the offer in a letter to his counterparts Wednesday. He said putting the new pension in place outside Ontario will help workers by allowing them to keep saving if they move provinces.
“It helps Canada, it helps workers,” Mr. Sousa said in an interview. “The opportunity to have some degree of portability fosters those workers to keep investing, regardless of where they work. It’s to the benefit of the employees and the employer.”
Many details of the pension plan, including how large the contributions will be and what benefits it will pay out, have not yet been determined. Mr. Sousa said other provinces are welcome to help Ontario decide these things.
The province is currently considering a model similar to Britain’s National Employment Savings Trust, a defined-contribution pension run as a not-for-profit at arms-length from government.
In the past, all provinces have been willing to discuss pension enhancement to varying degrees. On one end of the spectrum, Manitoba and Prince Edward Island have pushed hard for better pensions. On the other, Alberta has been non-committal, but left the door open for further talks.
Business groups – and the federal government – have warned that a new pension plan will make it more expensive for companies to operate, as they will have to pay more. If Ontario is the only province to buy into such a plan, it could encourage businesses to simply set up shop elsewhere in the country.
“If Ontario is foolish enough to go it alone … the government would have its fingers crossed that other provinces go too,” said Dan Kelly, president of the Canadian Federation of Independent Business. “If not, and I think that it is unlikely many would go ahead, Ontario’s competitiveness would take a serious slide.”
Once the plan is ready, it will still have to pass the legislature, where the Liberal government holds only a minority of seats. It will have to secure the help of at least one other party, likely the New Democrats, to get it through.
The plan could also become a central issue in an election widely expected this spring.