Federal Finance Minister Jim Flaherty has laid out his vision for pension reform, saying he would like to expand the country's public pension plan but also to create new private pension options for a wider range of workers.

Flaherty said he would like to see pension plans for self-employed people, small businesses and other workers not covered by corporate plans.

"I believe that we should consider a modest, phased-in and fully funded enhancement to defined benefits under the Canada Pension Plan in order to increase savings adequacy in the future," Flaherty writes in a letter to his provincial counterparts.

Flaherty's plan is in line with the reforms put forward by Ontario Finance Minister Dwight Duncan, who also released a letter Thursday.

The expanded CPP should be complemented by changes to federal tax rules and federal and provincial pension standards, Flaherty said. That way, governments can allow banks and insurance companies the flexibility they need to offer low-cost pension plans to multiple employers, different types of employees and the self-employed.

Such changes, Flaherty said, "will help enhance retirement savings and pension coverage without compromising our current system and without passing costs on to future generations."

Flaherty and Duncan do not support the call from unions and the NDP to double CPP benefits. Rather, they are urging a more gradual approach that would see a smaller increase in contributions and payments.

The ministers' proposed reforms have been two years in the making.

They wrote their letters to colleagues just three days before federal-provincial meetings in Prince Edward Island on pension reform.

After holding informal talks of his own, Duncan said he believes the two-pronged federal-provincial approach will serve as the basis for an agreement that could lead to concrete results soon.

"I think a consensus can emerge," Duncan said.

If provinces and the federal government can agree on broad principles, they could then ask a task force of experts to figure out the technical details and implement the reforms fairly quickly, Duncan said.

"Our hope is we can move forward with concrete measures in fairly short order" he said.

Duncan and Flaherty's proposals essentially rule out a voluntary supplementary layer to the CPP — an option favoured by the federal Liberals, among others, but criticized for being expensive to set up.

"We think it's not cost-effective," Duncan said in the interview.