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Sources inside the government tell The Globe and Mail that provincial Finance Minister Charles Sousa will likely lay the groundwork for Ontario’s own pension plan in next month’s Fall Economic Statement. (KEVIN VAN PAASSEN/THE GLOBE AND MAIL)
Sources inside the government tell The Globe and Mail that provincial Finance Minister Charles Sousa will likely lay the groundwork for Ontario’s own pension plan in next month’s Fall Economic Statement. (KEVIN VAN PAASSEN/THE GLOBE AND MAIL)

Ottawa non-commital on Ontario Liberals’ idea for pension plan Add to ...

The federal government isn’t saying no to a possible enhancement of the Canada Pension Plan, but is so far avoiding comment on the latest pension idea from Ontario.

In response to questions about the prospect of Premier Kathleen Wynne’s government launching a separate pension plan if there are not major enhancements to the CPP, Ottawa provided a statement to The Globe and Mail that made no specific reference to Ontario.

“We share the concerns of small business, employees, and some provinces of increasing costs during a fragile global recovery,” said the statement from Kevin Sorenson, the Minister of State for Finance. “We continue to discuss ways to improve the Canada Pension Plan with the provinces. We are working with the provinces to introduce Pooled Registered Pension Plans, which are employer-sponsored private pension plans that help to leave more money in the pockets of retirees.”

Meanwhile, at least one of Ontario’s opposition parties appears prepared to support the launch of a provincial plan, should Ms. Wynne’s minority government decide to press forward with it.

“We’re on board with an Ontario pension plan,” NDP Finance critic Michael Prue said in an interview on Wednesday, noting that his party put forward its own proposal for a new public pension in 2010.

In light of the federal government’s reluctance to increase CPP premiums and payouts to address a looming retirement-income shortfall, he said, the governing Liberals should have already moved on that front.

“CPP is not good enough,” Mr. Prue said. “And if the federal government won’t move on it, Ontario has to.”

The prospect of Ontario starting its own plan drew a considerably frostier reaction from Tim Hudak’s Progressive Conservatives. “The whole pension issue should be dealt with at the federal level,” Finance critic Vic Fedeli told reporters at Queen’s Park. “I would encourage our members to spend more time talking to them about encouraging them to get the solution.”

While saying that “everybody deserves a proper pension as we get older,” Mr. Fedeli also appeared to be opposed to requiring businesses and their employees to make more contributions toward that goal.

“There are two ways to do it,” Mr. Fedeli said of ensuring a secure retirement. “Our way is to grow the economy by reducing taxes, reducing hydro rates and putting people back to work. As always, the Liberals’ instant reaction: raise taxes.”

Don Drummond, the former TD Bank chief economist who conducted a high-profile 2011-12 review of Ontario’s finances, offered a response somewhere between that of the two opposition parties.

By far the best response to a steep projected decline in the income-replacement rate for much of the work force when it reaches retirement age would be to increase CPP contribution limits, Mr. Drummond said; if that’s not possible, he said, provinces acting on their own would be better than nothing.

But he described separate provincial plans as “definitely in the second-best world,” because of excessive implementation costs and duplication, and he warned that if Ontario were the only province to go that route, the cost to employers could hurt its competitiveness.

As reported on Wednesday morning, Finance Minister Charles Sousa is expected to hint at the prospect of launching a provincial plan in next month’s Fall Economic Statement, depending on whether meetings with his federal and provincial counterparts before year’s end result in significant “enhancements” to the CPP.

Ms. Wynne’s Liberals appear pessimistic about Jim Flaherty’s willingness to move on that front, although the federal Finance Minister has been difficult to pin down on the subject.

In June, 2010, Mr. Flaherty wrote a letter to provincial and territorial finance ministers asking them to support a “modest” and gradual increase in CPP premiums in order to fund higher benefits over time, and at a 2010 retreat in Charlottetown he took a clear position in favour of CPP reform. Yet when they met again as a group in Kananaskis, Alta., later that year, Mr. Flaherty said there simply was not the required level of support to move ahead. And since then, he has largely focused his attention on the voluntary pooled pension plans being rolled out by some provinces.

A more ambitious provincial pension plan would be a centrepiece of the Liberal platform in an election widely anticipated for next spring, and some Liberals believe that it would have considerable appeal to middle-income voters whose demographic is at the greatest risk of a steep standard-of-living decline when they reach retirement age. Others in Ms. Wynne’s party, however, are nervous about the response to trying to take more money off Ontarians’ paycheques, especially considering recent scandals around the waste of public dollars.

Provincial government insiders have told The Globe that in order for the plan to be effective, participation in it by employers and employees could not simply be voluntary.

Ontario would be the first province to launch a mandatory pension plan on top of CPP. Saskatchewan offers an opt-in plan that is available outside that province as well and functions much like a pooled registered pension plan, while the Quebec Pension Plan exists instead of CPP rather than in addition to it.

With files from Adrian Morrow.

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