Finance Minister Bill Morneau met his provincial and territorial counterparts in Vancouver on Monday and reached an agreement with a lot of them to expand the Canada Pension Plan.
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Employers would match these contributions.
Finance Minister Bill Morneau emerged with his provincial and territorial colleagues Monday afternoon in Vancouver to announce the plan.
The agreement in principle was signed by all provinces except Manitoba and Quebec and if fully implemented won’t start until 2019, the year of the next federal election.
Any change to the CPP needed a minimum of seven of the ten provinces.
That lack of co-operation from Ottawa prompted Premier Kathleen Wynne to promise the ORPP, but she emphasized Ontario would abandon that plan if a deal to enhance the CPP could be reached.
The pair has unabashed support from the government of Ontario, Canada’s most populous province, which has controversially pledged to create a separate pension scheme to “strengthen retirement security for Ontario workers” if agreement can not be reached on expansion of the CPP.
That means the focus of starting CPP enhancement now is on the long game.
Leitao put forward a proposal during the meeting that more selectively targets those Canadians who are the least likely to save in order to avoid putting an additional financial burden on low-income earners.
“Any inter-jurisdictional legislative initiative such as what is being pursued, no matter how well intentioned, inevitably becomes a struggle since it is always subject (to) the vagaries of immediate politics”, said Ritchie, who was a key player in Flaherty’s push to create a national securities regulator several years ago, around the same time CPP expansion was last seriously considered. In 1997, finance ministers agreed to a phased-in increase in premiums to ensure one generation of workers wasn’t paying for another generation’s retirement.
If approved by the provinces, a seven-year phase in period would begin in January with premiums raised moderately over time to provide greater payouts for Canadian pensioners.
Sousa says the much more positive attitude of Prime Minister Justin Trudeau’s Liberal government was instrumental in getting an agreement. Quebec has its own version.
That premium hike is why some critics of the expansion call it a payroll tax, a common refrain from the Opposition Conservatives who oppose an across-the-board expansion of the program.
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The federal and provincial governments are looking at a possible increase in the $55,000 cap on annual maximum pensionable earnings, which would result in both higher premiums and increased pension benefits.
