MEECH LAKE, Que. ? Federal and provincial governments cannot agree at the current time to enriching the Canada Pension Plan ? but have not ruled out the idea ? as support for CPP reform grows and the Harper government suggested it will heed the will of the provinces.
The country?s finance ministers, gathered in Meech Lake for their annual meeting, couldn?t find consensus Monday on the thorny issue of modestly enhancing the Canada Pension Plan to help more Canadians save for retirement.
However, they made what Ontario called ?an important step forward? by having federal and provincial officials determine exactly what a ?modest? increase in CPP would look like and the economic triggers ? such as real GDP and the unemployment rate ? that would need to be met before proceeding with reforms.
The finance ministers will discuss the findings from their officials at their next meeting in June, at which time they may decide whether or not to proceed with CPP reforms.
Federal Finance Minister Jim Flaherty said last week he would prefer to see consensus, with all provinces agreeing to CPP reforms, before deciding to proceed on such an important policy change.
On Monday, Flaherty said he would still prefer to see all provinces onside before forging ahead, but conceded that by the legislative rules, only two-thirds of the provinces representing two-thirds of the population need to approve the changes.
?There is no consensus on a CPP expansion at this time,? Flaherty told reporters following the seven-hour meeting.
?It is certainly preferable that we have a consensus with respect to such a serious matter, but the constitutional rule is two-thirds and two-thirds. We did not have that today . . . so there was not a consensus in that sense.?
Flaherty said the provincial and federal governments will see how the economy is performing in June, including on jobs numbers and real GDP growth, then determine whether to enrich the CPP.
He acknowledged that meeting the two-thirds rule for proceeding could be accomplished by June.
?We?ll have to wait and see,? he said.
A number of provinces are urging the federal government to modestly and gradually increase CPP contributions in the coming years to help Canadians better save for retirement. An enriched CPP would complement the new Pooled Registered Pension Plans ? a private-sector pension option to boost retirement savings ? that is endorsed by the Harper government.
The federal government and a handful of provinces are worried that increasing CPP contributions at the current time would slap an additional financial burden on employers during a fragile economic time, and could threaten their ability to hire workers.
Quebec and Alberta both previously opposed enriching CPP, believing pooled registered pension plans were a better option. But the new Parti Quebecois government says it?s now open to enhancing CPP contributions, although by how much remains an open question.
The Quebec government will wait for a provincial report on pensions that?s due back in February or March before committing itself to any specific CPP reforms, said Quebec Finance Minister Nicolas Marceau.
?We?re open to it,? Marceau said.
Ontario Finance Minister Dwight Duncan said agreeing to establish definitions on a modest enhancement and economic triggers is ?an important step forward? and one he didn?t think ministers would agree to Monday.
?There isn?t consensus for moving forward now but there?s certainly an overwhelming majority of provinces that do want to move forward,? Duncan said. ?It?s still a little too slow for my taste.?
Duncan said all provinces expressed an interest in looking at an enriched CPP at some point, although concerns remain over timing and how large the increase could be.
?There?s a much greater consensus among the population than there is among provincial governments. This will become, in my view, an important public battle. It could be an issue in the next federal election,? Duncan argued.
An increasing number of Canadians aren?t saving enough for retirement, he said, and the CPP only pays a maximum of roughly $12,000 per year as it currently stands.
?That?s a recipe for real danger if we?re not careful,? he added.
Alberta Finance Minister Doug Horner said his province is ?open to the discussion? about boosting CPP contributions and payments, alongside the new PRPPs, but he wants a better understanding of the size of the possible increases.
?There is a concern that our economy has a lot of danger signals in the future here that we have to get by,? Horner said, noting the fiscal cliff in U.S. and financial instability in Europe.
The Alberta government will wait for federal and provincial officials to report back to ministers in June before deciding whether to support enriching the CPP, he said.
B.C. Finance Minister Michael de Jong said ?a good balance? was struck among ministers on the need to look to PRPPs but also examine possible CPP reforms. Federal officials said following the meeting there was unanimous support to proceed with PRPPs as another savings option for Canadians.
It is estimated six in 10 Canadian workers in the private sector have no private pension plan, while approximately only one-third of Canadians make contributions to registered retirement savings plans.
The Canada Pension Plan is designed to replace about 25 per cent of a person?s employment earnings (up to a maximum amount) once they reach retirement at age 65. The current maximum pensionable earnings for CPP is $50,100, while the average monthly payment in 2012 (at age 65) was approximately $528, and the maximum monthly payment was about $987. The maximum CPP benefit will increase to approximately $1,012 per month in 2013.
Federal and provincial governments also agreed to minor technical adjustments ? but no major policy changes ? to the $15.4-billion equalization program, which transfers federal dollars to poorer provinces to help them pay for programs and services.
Ministers did not discuss the possibility for a national securities regulator but said it could be on the agenda for their June meeting.
jfekete@postmedia.com
Twitter.com/jasonfekete
Source: http://o.canada.com/2012/12/17/finance-ministers-at-odds-over-cpp-reform/
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