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Kevin Sorenson, the minister of state for finance, looks on as Finance Minister Jim Flaherty right, responds to a question from the media following federal-provincial Finance ministers meetings on Dec. 16, 2013.ADRIAN WYLD/The Canadian Press

The Canada Pension Plan has only one defect: It's too small. On Monday, federal Finance Minister Jim Flaherty once again blocked a proposal to bolster the income security of the next generation of retirees by expanding the plan. There's widespread agreement that Canadians are not saving enough, leaving many middle-income workers at risk of seeing their standard of living fall in retirement. The federal government acknowledges the problem, but refuses to take the cheapest and most effective step to address it. For three years, Mr. Flaherty has faced mounting provincial pressure to move on CPP expansion. And for three years, he's responded by ragging the puck. On Monday, meeting with his provincial counterparts, he delayed again, claiming that the economy is still too weak.

The CPP is not a welfare program, or an income-redistribution program. It's not paid for by taxes. It's a defined-benefit pension plan, and how much you get out of the program is based on how much you put in. It's actuarially sound, independently run and low-cost. It's one of the world's best-run retirement safety nets. But the maximum pension for a lifetime of contributions is just $12,000.

A majority of the provinces, led by Ontario and Prince Edward Island, have been pushing Ottawa to agree to expand the CPP. Mr. Flaherty shot them down once again on Monday. The Finance Minister doesn't disagree that Canadians need to save more. The choice is between each of us saving more on our own and all of us saving more, together. Canada's extremely low savings are testimony to the fact that the former approach, Mr. Flaherty's preferred route, isn't working.

CPP premiums are currently 9.9 per cent, split between employers and employees, on incomes up to roughly $50,000. Under the plan championed by PEI Finance Minister Wes Sheridan, premiums would gradually rise to 13 per cent and the maximum income covered would double, to around $100,000. Incomes below $25,000 would see no premium increase, because low-income Canadians are already sufficiently covered by the protections of Old Age Security and the Guaranteed Income Supplement. Those close to retirement would only be paying in for a few years, so their benefits would only increase slightly. But middle-income Canadians in their 20s, 30s and 40s would be able to rest assured that their retirement is covered by a stronger and more extensive retirement insurance plan. And unlike saving on your own, risks are pooled within the CPP. Regardless of where the market is at when you retire, you will get your pension.

In response to Mr. Flaherty's "no," Ontario is threatening to create its own provincial pension plan. This is taking a bad outcome and making it worse. Canada does not need a hodge-podge of overlapping provincial pension plans. It needs the existing national pension plan, expanded.

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