Flaherty seeks pension advice

Finance Minister Jim Flaherty takes his cross-country pension tour westward, meeting with banking officials and citizens in Winnipeg and Calgary to solicit opinions on Canada's retirement income system.

Finance Minister Jim Flaherty took his cross-country pension tour westward Monday, meeting with banking officials and citizens in Winnipeg and Calgary to solicit opinions on Canada's retirement income system.

Finance Minister Jim Flaherty is hosting a series of discussions on pension reform with Canadians from coast to coast. ((Canadian Press))

"All options are on the table," Flaherty told reporters before meetings Monday. 

The issue of pension reform has gathered steam in recent months with the high-profile collapses of numerous private pension plans, such as that of Nortel Networks Corp. When the tech giant entered bankruptcy protection in 2009, various levels of government stepped in with hundreds of millions of dollars to help guarantee pensions.

Despite those efforts, thousands of Nortel retirees have been left in the lurch and have lobbied the federal and Ontario governments to completely fill the gap at the insolvent firm.

In December, Flaherty met with his provincial counterparts in Whitehorse to discuss ways of overhauling the system. Some provinces favoured creating a second, complementary system to supplement the Canada Pension Plan, while others argued simply putting more money into the existing system is the wisest course.

Others have argued that smaller, more targeted moves such as tax breaks and increases to RRSP and TFSA limits should be used.

In October, Flaherty tinkered with the rules governing pensions at Crown corporations, but the changes fell well short of the across-the-board overhaul that some people have sought.

On Friday, CAW president Ken Lewenza lobbied in favour of a proposal that would effectively double the amount paid out under the CPP by gradually increasing workers' contributions to the plan by about 58 per cent over seven years.

Flaherty went to great pains, however, to stress the government has not made up its mind on the issue, and the town hall pension consultations are just that — consultations.

"We're not prejudging these issues," Flaherty said. "The first principle is 'do no harm' and make sure we maintain a strong public pension system in Canada. Then we'll look at other options."

Flaherty, who said a report will be completed in June, held similar meetings in Atlantic Canada last week, as he works his way across the country. He met with a second group in Calgary later Monday afternoon.

Many private-sector pension plans are significantly short of the funds needed to pay their promised benefits, because of weak investment returns and historically low interest rates. And many employers are behind on payments required to meet these funding deficiencies, as a large number of Canadians are due to retire in the coming decades.

General Motors currently has a pension shortfall in excess of $100 billion, while Air Canada, Stelco, Alcan, BCE, Bombardier and Canwest Global, which is currently restructuring, are among a handful of Canadian firms that have struggled to deal with underfunded pensions in recent years.