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Provinces reach agreement on CPP reform conditions

Alberta’s Doug Horner says any proposal will have to meet some important conditions.

Adrian Wyld/The Canadian Press

The provinces are moving closer to a deal to expand the Canada Pension Plan, asking workers and employers to contribute a little more in exchange for richer benefits in retirement.

After a day-long meeting in downtown Toronto on Friday, provincial finance ministers emerged with an agreement on four conditions that would have to be met in any CPP reform: Enhancements would have to be fully funded, have a limited effect on businesses that would have to pay higher rates, improve retirement payouts for the middle class, and protect low-income earners.

"I'm leaving very encouraged that we are going to be able to find something that fits very nicely with our business groups and our labour groups," said PEI Finance Minister Wes Sheridan, one of the chief advocates for a richer CPP.

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"Something that Canadians can embrace as something that will see the best savings vehicle in the world right now enhanced," he said.

At the meeting, Mr. Sheridan outlined one possible framework. Under his proposal, those earning between $25,000 to $50,000 per year would pay 1.5 per cent more into CPP, with their employers paying a further 1.5 per cent. The maximum insurable earnings cutoff would rise to $101,000 a year. These changes would be phased in over five years.

The provinces, however, did not reach any consensus on what a CPP enhancement would look like. They only agreed that the matter should be studied further.

Key to making a final deal will be Quebec and Alberta, the two provinces that scuttled a proposed CPP enhancement three years ago.

During a break from Friday's meeting, Quebec Finance Minister Nicolas Marceau said his province now supports an enhancement, at least in theory.

"Quebec is in favour of an enhancement of public pensions," he said. "[It must be] gradual, fully funded and happen only once the Quebec economy is growing more vigorously."

Alberta's Doug Horner, meanwhile, said any pension proposal would have to meet some important conditions.

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"If we're going to have a CPP enhancement ... we have to have an understanding it's not going to damage economic growth," he said in an interview.

The hope among provinces pushing for improved CPP is that the ministers can reach an agreement on the matter when they sit down with federal Finance Minister Jim Flaherty in December.

Ottawa has consistently left the door open to CPP enhancement, but expressed concern at its possible effect on companies.

Some business groups, including the Canadian Federation of Independent Business, have argued that the federal government should abandon the idea altogether. They maintain that increasing employers' contributions could lead to job losses.

Ontario Finance Minister Charles Sousa tried to assuage such fears on Friday, saying the provinces would take the effect on business into account before deciding how to structure any enhancement.

"We're not going to advance on a number until we've come to an agreement with employers and employees who will be affected," he said at Queen's Park later in the day.

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About the Author
Washington correspondent

Adrian Morrow covers U.S. politics from Washington, D.C. Previously he was The Globe's Ontario politics reporter. He's covered news, crime and sports for The Globe since 2010. He won the National Newspaper Award for politics reporting in 2016. More

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