Five provincial finance ministers head into a meeting Friday divided over a proposal to set up a separate national pension system. They are to meet in Vancouver to begin hashing out solutions to Canada's looming pension crisis.
A key item of the agenda for ministers from British Columbia, Alberta, Manitoba, Ontario and Nova Scotia is a proposal championed by B.C. and Alberta to create a new national pension system for Canadians who don't have a workplace pension plan.
A task force set up by the two western provinces proposed late last year that Alberta and B.C. should move alone to create a new voluntary pension plan, allowing workers or their employers to make contributions to a fund that would be centrally administered by the two provinces. The proposed plan would augment the existing Canada Pension Plan, and would provide a new savings vehicle for Canadians who don't have a workplace pension plan.
The provinces have since suggested the idea should be adopted nationally, but it is not clear yet the federal government or Ontario are willing to commit. Ontario has not rejected the idea, but is arguing there should first be a broader review of options, said Darcy McNeill, a spokesman for Ontario Finance Minister Dwight Duncan.
“Certainly from Ontario's perspective, it's not just about setting up a parallel pension plan. It's about what is the right plan to help people plan for retirement,” Mr. McNeill said.
The ministerial meeting is part of a new federal-provincial working group on pension reforms, which is studying solutions to provide better pensions to more workers.
The committee, comprised of the five participating provinces and the federal government, has a broad mandate to examine alternative ways to bolster savings, but is particularly focusing on the new pension scheme proposal.
The task force was created after recent reviews in Ontario, B.C., Alberta and Nova Scotia all warned that an aging population, combined with declining pension coverage for workers, will leave increasing numbers of retirees with poor retirement incomes.
Statistics Canada data show only 25 per cent of private sector workers in Canada had a workplace pension plan in 2005, down from more than 35 per cent in the late 1970s.
Graham Currie, spokesman for B.C. Finance Minister Colin Hansen, said ministers from Saskatchewan and PEI will also participate in today's meeting by telephone, while officials from the remaining provinces will monitor the meeting.
Support for a new pension scheme appears greatest in Western Canada. British Columbia has already pledged to go ahead with the pension proposal on its own if there is no national support. Alberta Finance Minister Iris Evans has said she would prefer to see a national model, but would be willing to work with B.C. on a provincial plan.
Manitoba Finance Minister Greg Selinger said yesterday that he sees “a lot of merit” in the proposal, but believes it should be done nationally.
“We'd prefer the pan-Canadian approach because it really builds on the accomplishments we've put in place for labour mobility, and it allows more options for Canadians when they decide where they want to work or where they want to live,” he said.
“Portability is really an important feature of any kind of pension reform scheme.”
Vancouver lawyer Scott Sweatman, who co-chaired the Alberta-B.C. pension task force, said it appears the federal government will not support the western model at this time, but he believes it would work well even with just two provinces. Others could join later if they are impressed by the track record, he said.
“My advice to our ministers here is to keep going, don't slow it down. Sure, if you want to go afterward and do something nationally, terrific. But we don't need to wait for it.”
The proposed western model would be a defined contribution pension plan, which means retirees would receive varying payouts depending on the investment returns earned, and there would not be a guaranteed payout level like a traditional pension plan. It would be voluntary, and workers could contribute even if their employers do not.
Mr. Sweatman said pensions are a pending crisis in Canada.
“We have a serious savings problem in this country, that's the bigger message that needs to get across,” he said. “People are just not saving enough.”
