TORONTO (Reuters) — Ontario said on Tuesday it will delay the launch of a new government pension plan until January 2017, having reached an agreement with Ottawa to work together to enhance the federal plan.
Canadian Finance Minister Bill Morneau and Ontario Finance Minister Charles Sousa said in a joint statement they had agreed to renew efforts to enhance the existing Canada Pension Plan (CPP), a move that could mean a modest increase to both employer and employee contributions.
The refusal of the previous federal Conservative government to change the CPP had prompted Ontario's Liberal government to go out on its own to boost retirement security for residents, but the election of a federal Liberal government in October opened the door to new cooperation.
"Ontario welcomes the federal government's leadership in renewing a national dialogue to enhance the Canada Pension Plan (CPP), and is committed to continuing to work collaboratively with the federal government, provinces and territories to make progress on a national solution that addresses the needs of future retirees," the two finance departments said in a joint statement.
The two governments said they will work with other provinces and territories to "develop options" for CPP enhancements by the end of May, in time for a meeting of finance ministers in June.
Ontario has taken a two-track pension strategy since 2013, preparing to introduce the Ontario Retirement Pension Plan (ORPP) while also waiting for a possible expansion of the CPP, the federal plan that covers most working Canadians.
Under the Ontario plan, every eligible worker in Ontario will be part of either the ORPP or a comparable workplace pension plan. The lowest-income earners will not be required to contribute.
Enrollment in the Ontario plan will now start in January 2017, a year later than the original start date, and the first phase of contributions will start in January 2018, the statement said.
Sousa had said in January it had so far proven too difficult to get the necessary agreement required among Canada's provinces to expand the CPP.
Like other governments around the world, Canada faces a challenge to provide for its aging population. By 2024, more than 20 percent of Canadians are expected to be age 65 or older, the traditional retirement age, according to federal government data.
To Read the Full Story, Subscribe or Sign In