Social Policy in Ontario

The Canada Pension Plan (and its twin Quebec Pension Plan) is one of our most important social programs and is an exemplary model in the world as a fair, solid and secure retirement income plan.  Over the past few years, the federal and provincial/territorial governments have been exploring ways to enhance the Canada Pension Plan to ensure more adequate earnings replacement for retired workers.

On November 1, 2013, provincial/territorial finance ministers met and agreed on four conditions for CPP expansion.  They hope to advance matters when they meet with the federal finance minister in December.  While these discussions are a positive development, deliberations on reforming the Canada Pension Plan are taking place behind closed doors, restricted to government officials and ministers.

This paper argues for a formal consultative process to provide a voice for the range of non-governmental organizations and individuals interested in pension reform.  It calls upon the federal finance department to model and make publicly available information on various options for CPP enhancement in order to assess their design, distribution and cost.

The Caledon Institute has proposed a ‘1.5 solution’ to CPP expansion that would increase the earnings replacement rate by 1.5 times from its current 25 percent to 37.5 percent of Yearly Maximum Pensionable Earnings.  We also would raise the Year’s Maximum Pensionable Earnings by one-half, from $50,100 to $75,150 in 2013.  This option would be of particular assistance to middle-income earners, especially those who work in the private sector and are therefore unlikely to enjoy coverage of employer-provided pension plans.

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A copy of this publication is available in Microsoft Word format. Please contact the Caledon Institute for information.