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Enhancements to pension plans

The federal government will not commit to enhancements to the Canada Pension Plans (CPP). This is the conclusion of the meeting between the ministers of the federal government and the Ministers of Finance of the different provinces.

While most provinces are in favour of an increase in contributions to employers’ and workers’ pension plans, the federal government has clearly taken a position against it. Finance Minister Jim Flaherty believes that such an increase would affect the Canadian economy, including producing a decrease in hiring and wage cuts.

The primacy of saving

Rather than increasing contributions, the Harper government prefers to encourage forms of personal savings, such as the Tax Free Savings Account (TFSA), the Registered Retirement Savings Plan (RRSP and the progressive establishment of Voluntary Retirement Savings Plans (VRSP) to increase the income of Canadians in retirement.

Ministers disappointed

While the question of pension plan revisions has been raised regularly over the last five years, Ottawa considers that the time is not yet right. This position is in total disagreement with all the provinces. The different Finance Ministers did not hesitate to show their disappointment when leaving this meeting on pensions. The Manitoba minister, Jennifer Howard, confirmed the importance of gradually increasing contributions, as did the Quebec minister, Nicolas Marceau. But the Ontario minister, Charles Sousa, went the furthest in asserting that his province was ready to put in place its own pension plan without waiting for approval from Ottawa.

Shared reactions

Reactions to this decision did not have to wait long from the unions and professional associations. The Canadian Labour Congress, the Public Service Alliance of Canada and the FADOQ network denounced the federal government’s attitude while calling for a rapid enhancement of public pensions plans. The Canadian Federation of Independent Business and the Conseil du patronat du Québec welcomed the news. An increase in contributions would have undermined the competitiveness of businesses.

To reiterate, public benefits account for 39% of retirement income in Canada. This level is significantly less than other OECD countries where they represent an average of 59%.

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