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Prince Edward Island Premier Robert Ghiz supports a provincial pension system to supplement the CPP.Andrew Vaughan/The Canadian Press

Prince Edward Island and Manitoba are signing up to help Ontario develop a new pension system, adding steam to the province's push for a major reform of retirement security.

"It's about planning for the future. If we don't plan for retirements in the future, it's going to put extra strains on our health-care system, on our social safety net," PEI Premier Robert Ghiz said in Toronto after a meeting with Ontario counterpart Kathleen Wynne. "This is about allowing people to invest into the future."

The three provinces are now working together to create a proposed pension system to supplement the Canada Pension Plan, with the aim of delivering extra benefits to retirees.

An advisory panel made up of pension experts and seniors' advocates is currently helping Ontario Finance Minister Charles Sousa work out the specifics of the plan. Civil servants from Manitoba and PEI will now join this group.

The exact details of the plan will be revealed in the spring, but government insiders have hinted that it will be a defined contribution plan run as a non-profit organization at arm's length from the government. The aim primarily is to help middle-income earners. It is likely to be modelled after the National Employment Savings Trust in Britain.

Ontario decided to press forward with a provincial pension plan after the federal government rejected its call to expand the CPP.

Ottawa contends that, in the current uncertain economy, it would be a bad idea to force companies and employees to pay more into the national pension system. Such a measure would make the country less competitive and make it hard on businesses, critics of the pension-enhancement idea say.

Federal Minister of State (Finance) Kevin Sorenson slammed Manitoba and PEI for showing interest in Ontario's plan.

"Today's announcement means that even more Canadian businesses will be disadvantaged with higher payroll taxes that will kill jobs and deter investment. Employees simply can't afford a smaller paycheque in this fragile economy," he said in a written statement issued by his office.

He also called on Ontario to allow for private Pooled Registered Pension Plans instead. The province has previously said it does plan to allow PRPPs, but Mr. Sousa has not laid out any timeline for implementing them.

Ms. Wynne has tried to frame the pension plan as an investment rather than as a tax.

"Many middle-income earners are not saving enough to retire, and seniors who were ready to retire are finding themselves going back to work because they can't live on their current plans. Fewer than 35 per cent of Ontario workers have a workplace-based pension plan," she said.

"It doesn't matter whether you live in Summerside, PEI, or Steinbach, Manitoba, or Waterloo, Ontario, it's clear that you need to have an opportunity for a secure retirement."

The Ontario government is planning to bring forward legislation to create the pension plan this spring. Because Ms. Wynne's Liberals control only a minority of seats in the legislature, it will need the help of at least one other party to pass it into law.

The Progressive Conservatives are opposed to the pension plan. The NDP supports it, but has not yet committed to voting in favour of it.

It is not clear whether other provinces will join Ontario's push. Quebec already has its own pension plan, separate from CPP, and Alberta is sitting on the fence, waiting to see the outcome of pension talks before making any decision.

British Columbia is waiting for Ontario to table a concrete plan, and will take a looks at it when it does, the province's Finance Minister, Mike de Jong, said in a statement.

"B.C. recognizes the need for the federal and provincial governments to find effective solutions to the under-savings problem faced by current workers and thereby address the shortfall in retirement income that it is expected to create for future generations of Canadians," he said Wednesday. "B.C. acknowledges the commitment of the Ontario government in continuing to look for answers to the under-saving and pension coverage problems facing many Canadians and looks forward to examining any options it, or other jurisdictions develops to address these issues."

Mr. de Jong also expressed support for PRPPs.

The Nova Scotia government has said it is looking to consult with business and citizens before deciding what it will do on the pension front.

New Brunswick, Newfoundland and Labrador, and Saskatchewan did not respond to requests for comment.

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