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Dec 17, 2013

Provinces fail to reach deal with Ottawa to lift pensions

'Very disappointed in stall tactics,' says Ontario finance minister
By Louise Egan
    
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MEECH LAKE, Que. (Reuters) — Canada's federal government and the governments of its 10 provinces failed to agree on Monday on a deal to enhance the country's public pension plan.

Some provinces, worried by studies showing Canadians are not saving enough for retirement, want to boost Canada Pension Plan (CPP) payouts by obliging workers and employers to make higher contributions.

But the federal Conservative government says asking people to pay more at a time when the world economy is still fragile makes no sense.

"Now is the time for fiscal discipline... now is not a time for CPP payroll tax increases," Junior Finance Minister Kevin Sorenson told reporters after what he called a very frank discussion.

"There was no consensus today on expanding CPP. We will continue to look at the economy and discuss this again in the future," he said.

The idea of enhancing the CPP has been on the provinces' agenda for several years, with most proposals calling for higher contributions in order to double the maximum retirement benefit from the current $12,150 a year.

Charles Sousa, finance minister of the influential province of Ontario, said the federal government was the main opponent of reforming the system.

"I'm very disappointed that they used stall tactics to ensure that CPP enhancement wasn't even considered at this time," a visibly angry Sousa told reporters, saying his province was determined to go it alone.

Federal Finance Minister Jim Flaherty said he did not want to adopt a policy that would affect everyone when studies showed only around 23 per cent of the population might suffer from not having saved enough.

The CPP provides less than half the maximum coverage of U.S. Social Security for retirees, but two other supplementary programs bring combined benefits close to U.S. levels for lower- and middle-income people.

The Canadian Federation of Independent Business, which said higher CPP contributions would damage the economy, welcomed the deadlock but added in a statement: "It is clear that this threat is not going away."

Because the CPP is a joint federal and provincial responsibility, any changes to it require the approval of two-thirds of the provinces representing two-thirds of the population.

The Canadian Association of Retired People described the lack of results as very disappointing and vowed to make reform of CPP an issue at the next federal election, which is due in October 2015. Polls show that elderly voters are more likely to vote Conservative.

    
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