CPP changes derailed as federal finance minister puts forward a limited voluntary private-sector pension option designed for small businesses and the self-employed.
Ottawa (21 Dec. 2010) - Millions of Canadians heading for retirement without adequate savings or income will have to keep on waiting for Canada Pension Plan (CPP) reform after talks to make serious changes were derailed by Canada's finance ministers this week.
Led by federal Finance Minister Jim Flaherty, ministers representing all 10 provinces and three territories decided at a meeting in Kananaskis, Alta., to delay negotiations on improving the CPP until their next meeting in mid-2011.
Whether anything happens then remains an open question too.
Instead, they agreed to move ahead with a voluntary private-sector framework for retirement savings that has yet to be worked out in detail.
If legislated as planned, it will eventually allow for the creation of so-called Pooled Registered Pension Plans (PRPPs) to be used primarily by small and medium-sized businesses and the self-employed.
This "low-cost" private option would be offered to employees who have no current private pension plan and would be available with or without a participating employer.
The idea, which grabbed the lion's share of the headlines from the meeting, overshadowed the real news from the talks, which was that Flaherty, acting on behalf of the federal Conservatives in Ottawa, managed to derail the real reform that Canadians need most – substantial improvement in the CPP.
“We agreed that our officials should continue their work on the CPP,” Flaherty said. "We will come back at our June meeting to discuss options and concerns.”
Ontario Finance Minister Dwight Duncan, who favours increasing contributions and benefits under the CPP, called the commitment to further talks a step in the right direction and said he was encouraged that CPP reform will be on the agenda the next time finance ministers meet – in June 2011.
Ontario and five other provinces sent Flaherty a letter prior to the Kananaskis meeting demanding that Ottawa not abandon CPP expansion as an option for addressing pension problems.
An estimated 60% of Canadian employees have no workplace pension plan and approximately 1.6 million seniors are trying to get by on less than $15,000 a year in government support.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE