The clock was ticking down Monday as the country’s finance ministers wrestled with how best to recalibrate the Canada Pension Plan for future generations — with Ontario pushing for a hasty agreement and Quebec pushing a go-slow approach.
Ontario Finance Minister Charles Sousa said a one-day deal was well within reach, but Quebec counterpart Carlos Leitao brought his own proposal, insisting that he would only support changes that are targeted, modest and gradual.
So far, the proposals on the table are only two-thirds of the way there, said Leitao, whose own proposal more selectively targets those Canadians less likely to save, to avoid putting an additional financial burden on low-income earners.
Under the Quebec plan, increased pension premiums would only kick in for those who make more than about $27,000 per year, which is about half the yearly maximum pensionable earnings for 2017.
The proposal argues that supplementing the income of Canada’s lowest earners is better achieved through other government policies, such as old age security and the guaranteed income supplement.
With Ontario well on its way towards developing its own pension program, the pressure was on to reach a national agreement — something Sousa said would be his preference.
“We want consensus,” Sousa said, insisting a deal “today” was well within reach.
“We want everybody to participate. We want everybody involved.”
Revamping the Canada Pension Plan is critical to ensuring that future generations of Canadians can retire in dignity, no matter the state of their finances, said federal Finance Minister Bill Morneau.
“We’ve heard from Canadians (about) the importance of retirement security,” Morneau said before the meeting.
“I’m looking forward to working together with my colleagues across the country to improve the long-term future for Canadians.”
Reforming the pension system needs the support of at least seven provinces representing two thirds of the country’s population, which gives Ontario an unofficial veto over any decision.
The legislation, as currently written, also states that any reforms can only be implemented three years after a federal-provincial agreement is reached.
Coming into the meeting, Saskatchewan and B.C. have suggested economic conditions aren’t right for a change that’s likely to lead to an increase in the premiums that come off workers’ paycheques.
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.
Federal research has suggested that workers who are the least likely to save for retirement tend to be under the age of 30, earn between $55,000 and $75,000 (although some estimates are higher), and either don’t save enough or lack access to a workplace pension plan.
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.