Flaherty: Pooled pension consensus reached
Finance Minister Jim Flaherty says he and his provincial and territorial counterparts have agreed on "implementation of a framework" to create a private pension plan for small businesses, employees and the self-employed.
But Flaherty, speaking Monday after a finance ministers meeting in Kananaskis, Alta., reiterated his belief that now is not the time for mandatory increases for Canada Pension Plan premiums, saying Canada's economic recovery remains fragile and the Conservative government is worried about "putting more burdens on employers and employees."
The pooled pension plan "will make well-regulated, low-cost, private-sector pension plans accessible to millions of Canadians who have up to now not had access to such plans," he said.
Do you believe CPP premiums should be expanded now? Take our survey.
Flaherty also said federal equalization payments to provinces for 2012 will be $14 billion.
In addition, transfer payments for health care will increase by about six per cent, while transfer payments for social services will increase by about three per cent.
During the meeting, all provinces and territories agreed to move to balanced budgets in the "medium term," the federal finance minister said.
While "virtually all" of the provinces will have balanced budgets by 2015, Ontario, which took the "hardest hits" during the global recession, may lag, Flaherty added.
Change of tack
Flaherty surprised his provincial colleagues last week when he said he wouldn't be proposing any CPP expansion because not all provinces were on board.
Instead, the minister said he'd be pushing a new private-sector plan allowing small firms, employees and even the self-employed to pool resources on new, low-cost pensions.
Alberta Finance Minister Ted Morton said Monday that he is glad there won't be changes to the CPP. "It's hard to imagine much interest in pursuing that in Alberta," he said as he left the meeting.
Other ministers were disappointed.
The finance ministers of B.C., P.E.I., Nova Scotia, New Brunswick, Manitoba and Ontario issued a joint statement Sunday asking Flaherty to keep CPP expansion on the table alongside the private-sector changes he's proposing.
The provinces said the federal government should phase in a "modest" fully-funded expansion to the CPP and make changes to provide more Canadians with low-cost pensions. They said they support Flaherty's private-sector proposal, but insisted it shouldn't preclude Ottawa from also improving the CPP.
"Ontario supported the federal proposal, but we don't think that it goes far enough," Ontario Finance Minister Dwight Duncan said Monday.
The federal Liberals also hoped for more.
"We just think that the result today was not ambitious enough, not visionary enough," Deputy Leader Ralph Goodale told the CBC's The Lang & O'Leary Exchange.
He said that two-thirds of Canadians have not planned enough and are not well enough prepared for retirement.
"A private pooled approach could be one element in a total package, but if this is all the ministers get to, if it's all they wrote, then it's hopelessly inadequate to address the problem."
Ken Lewenza, president of the Canadian Auto Workers union, said the federal government didn't push hard enough to reach a CPP agreement.
"Enough provinces were in favour of improving the CPP for legislation to be passed to increase it — the real weakness came from the federal government," he said in a release.
"Finance Minister Jim Flaherty is failing to appreciate that many Canadians do not have money to save, period," said Lewenza. "How then will they have money to save in a pooled pension plan?
"We are once again setting ourselves up to fail and let down hundreds of thousands of Canadians who will not have enough to live on in retirement."
Quebec defends pooled plan
Quebec Finance Minister Raymond Bachand said the pooled pension plan will be "very efficient," especially if it's compulsory for employers to offer the plan to their workers. It would not be mandatory for the employers to contribute to the plan, and employees would have the option of opting out.
The federal minister has described the proposed private-sector pensions as "pooled registered pension plans," which, at the earliest, could be in place by the end of 2011.
Under the proposal, the pooled plans would be based on defined contributions. They would be available to any type of employee, as well as the self-employed.
The Canadian Taxpayers Federation said the key is to avoid a CPP contribution hike.
"At the end of the day the best way for government to help Canadians save would be for them to leave more money in the pockets of taxpayers," said federal director Kevin Gaudet.
With files from The Canadian Press