On December 15-16, federal finance minister Jim Flaherty and the provincial and territorial finance ministers will meet in Meech Lake, Quebec to discuss pension reform.
Toronto Star columnist Martin Regg Cohn has written, “The Canada Pension Plan (CPP) pays only 25 per cent of the average industrial wage (currently about $50,000) — capping pension payments at a mere $12,500 a year. …(A discussion paper by federal officials says) we could raise the CPP’s ‘replacement rate’ from 25 to 35 per cent of current income. And we could boost the eligible earnings ceiling from $50,000 to about $75,000. Doing so would go a long way to narrow the pension shortfall (estimated at an average of $6,200 per person a year) — the amount by which retired Canadians will be unable to meet their needs annually.”
He adds, “This could be achieved with a relatively modest increase in premiums of about $1,000 a year for the highest-paid employees (employers would pay half of the cost through payroll taxes), or about $540 a year (cost-shared with employers) for workers earning about $50,000 a year.”
And last December, this seemed a real possibility. The Globe and Mail reported at that time, “Positive comments from the (finance) ministers mean that a major national policy move that had largely disappeared from public debate is now very much on the agenda and could be approved by the end of 2013.”
But this runs contrary to the austerity agenda of Prime Minister Stephen Harper. Remember that in January 2012, Harper pledged to the world’s corporate elite in Davos, “We’ve already taken steps to limit the growth of our health care spending. We must do the same for our retirement-income system.” At the time of speech, his government had announced a unilateral cut of $36 billion over a ten year period to health care spending, and just a few months after Davos it passed C-38, a budget implementation bill that will increase the eligibility age for Old Age Security from 65 to 67.
And so his government is putting the brakes on pension reform. The Globe and Mail has reported, “While federal bureaucrats have recommended a modest expansion of the CPP, Flaherty has worked to sabotage the process.”
So by June 2013, the Globe and Mail reported, “(The Conservatives are) arguing that the focus should be on Pooled Registered Pension Plans (PRPPs)… The PRPPs would operate like a group RRSP. Employees could make payroll contributions, but employers would not be forced to contribute. …(Ontario disagreed saying) another voluntary savings vehicle like the PRPPs won’t address the problem of Canadians not saving enough for retirement.”
And now in today’s news, the Globe and Mail reports, “The Conservative government is warning against an expansion of the Canada Pension Plan ahead of a key meeting with the provinces, raising the possibility that years of talks will not produce a decision to act. …Prince Edward Island and Ontario have rallied provincial support throughout the fall for a national agreement on what they call a ‘modest’ enhancement to the CPP. …But the federal minister responsible for pensions – Minister of State for Finance Kevin Sorenson – is rejecting the suggestions from PEI and Ontario.”
Further reading
CPP expansion could be blocked by Harper government’s PRPPs agenda
Flaherty sabotaging doable pension benefit increases
