CPP reforms: Still alive, but on life support
TheStar.com – opinion/editorials
Published On Tue Dec 21 2010.
There is hope yet for an expanded Canada Pension Plan (CPP) as a solution to looming retirement woes, but it is hanging by a thread.
At their meeting Monday in Kananaskis, Alta., the federal and provincial finance ministers agreed that officials would continue working on enhancements in the CPP. “We will come back at the June meeting to discuss options and concerns,” said federal Finance Minister Jim Flaherty.
Ontario Finance Minister Dwight Duncan, a big proponent of CPP reform, defined this outcome as a success. “We managed to keep CPP on the table,” he explained. Perhaps, but several provinces are cool to the idea of expanding the public plan, and Flaherty himself appears decidedly lukewarm.
That’s a far cry from last summer in Charlottetown, where the federal and provincial finance ministers (with the notable exception of Alberta) all agreed on expansion of the CPP, with details to be worked out later.
The financial meltdown of 2008-9 has provided the impetus for CPP reform. By gravely undermining the value of corporate pension plans and individual RRSPs, the meltdown underscored the need for a stronger public alternative. It also accelerated the move by corporations away from defined benefit and toward defined contribution plans, which promise less for workers upon retirement.
Unions and other progressive voices began pushing for a gradual doubling of the CPP maximum payout – to $22,400 a year — as an alternative. Given that the CPP is both portable and solvent, that seemed a better option than trying to squeeze more out of private sector plans. And the country’s finance ministers bought into the idea last summer.
What happened between then and now? Clearly, the opposition of Alberta — home base for this federal government – had some impact. So, too, did lobbying by financial institutions pushing private sector solutions such as “pooled registered pension plans” for small businesses, an idea the finance ministers endorsed at their Monday meeting. (Duncan described it as “another modest savings vehicle that may or may not be taken up by individuals and companies.”)
As for an expanded CPP, Flaherty said “this is not the time” to proceed. He suggested that loading higher premiums onto employers and employees would threaten the “fragile” economic recovery.
But no one is talking about an overnight doubling of CPP premiums. The proposal being advanced by the Canadian Labour Congress and others is to phase in an increase in premiums and payouts gradually.
In fact, there is no better time to do this, given the momentum for reform in the wake of the financial meltdown. Six provinces remain united in their desire for an enhanced CPP. They should keep up the pressure on Flaherty.
And the federal opposition parties should continue pressing for CPP reforms in Parliament and on the campaign trail, if, as expected, we have a national election in 2011.
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