TORONTO – All of Canada’s provincial and territorial finance ministers agree that something needs to be done to enhance the Canada Pension Plan, Ontario’s treasurer said Friday.
Quebec, Alberta and Saskatchewan “had some issues,” Ontario Finance Minister Charles Sousa said after emerging from a meeting with his counterparts in Toronto.
“But in the end, they all agreed that there is a definite problem and we need to resolve it.”
The group found common ground by agreeing to several objectives and principles for possible CPP changes, including moderating the effect it may have on businesses and the economy, Sousa said.
The Canadian Federation of Independent Business is urging the ministers to reject mandatory increases to CPP, saying it will end up killing jobs and reducing work hours by forcing small businesses to hike payroll taxes.
Workers and companies currently split the premiums, which are 9.9 per cent of a workers’ annual salary.
Sousa said the group didn’t arrive at a new number, but agreed that they’ll need to talk to business groups, labour associations and other “stakeholders” first.
They talked about “amending” the number depending on the salary range “as well as possibly alternating numbers,” he said. But they couldn’t come to an agreement.
“But they recognize that something of that nature will have to be done,” he said.
“So I don’t want to advertise a number at this point. There’s a recognition though that the amount that we now have isn’t sufficient.”
Prince Edward Island wants to hike maximum CPP contributions to $4,681.20 a year from $2,356.20 starting in 2016, and boost the maximum benefit to $23,400 from $12,150.
CFIB said their analysis suggests the P.E.I. proposal would result in a one per cent drop in wages and the loss of 500,000 person years of employment.
“Even polling done by public sector unions tells us that a majority of Canadians who are struggling to save for their retirement simply can’t afford to,” CFIB president Dan Kelly said in a release.
“Adding a higher payroll tax deduction to their paycheque is not going to help them.”
Even though some provinces are still in the red, they can’t afford to waste time when it comes to improving retirement incomes, Sousa said.
There’s a “tsunami” of workers retiring over the next few years who won’t be able to survive on CPP, he said. The pressure on social services will hit all the provinces hard financially.
Ontario, along with other provinces, have introduced pooled registered pension plans, but that’s not enough, Sousa said. They need to do both.
“So it’s understood that we have to correct this now, put in place something that’s going to provide positive benefits in the future,” he said.
The Canadian Labour Congress has been calling for a doubling of CPP benefits for several years.
All the ministers agreed that any proposed enhancements should be fully funded and improve the pensions of middle-income workers, as well as protect low-income workers, Sousa said.
But they didn’t talk about the age at which workers can start collecting CPP, he said.
Ontario Premier Kathleen Wynne said she wants to work with Ottawa and the provinces to improve the CPP, but will consider the implications of having an Ontario Pension Plan if there’s no consensus on the issue.
CFIB said four out of five respondents in a recent survey of their Ontario members rejected the idea of a separate provincial plan.
“Furthermore, 65 per cent said such a move would force them to freeze or cut salaries, and 42 per cent said they would have to reduce staff,” CFIB said.
Sousa said the “lively” discussion also included talk about Old Age Security, federal transfer payments and the newly created co-operatives securities regulator — an alternative to the stalled national regulator that is supported only by the federal government, Ontario and British Columbia.
The ministers will be meeting with federal Finance Minister Jim Flaherty in December at Meech Lake, Que.
Kevin Sorenson, the minister of state for finance, expressed concern about the cost of boosting CPP benefits.
“We share the concerns of small business, employees, and some provinces of increasing costs during a fragile global recovery,” Sorenson said in a statement.
“We continue to discuss ways to improve the Canada Pension Plan with the provinces.
“We encourage 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.”