CHARLOTTETOWN, Prince Edward Island (Reuters) - Canada’s government and most of the 10 provinces have agreed to consider a modest increase to Canada Pension Plan contributions but a final deal is still some way off, federal Finance Minister Jim Flaherty said on Monday.
Flaherty, who wants Canadians to save more for retirement, pressed the idea when he met with his provincial counterparts in the Eastern Canadian province.
“We agree to consider a modest, phased-in, and fully funded enhancement to defined benefits under the CPP in order to increase coverage and adequacy,” he told reporters.
Senior officials from both levels of government should have the preparatory work completed by the fall, he added.
To push through planned changes to the pension system, the Conservative government needs the approval of Parliament as well as backing from two-thirds of the provinces representing two thirds of the population.
“We were not unanimous, but certainly the substantive majority view was that we should proceed,” said Flaherty.
“Now there’s a lot of work to be done. You know, what does modest mean? How do we go about doing this?”
Some business groups, as well as the powerful western province of Alberta, oppose the idea. Alberta Finance Minister Ted Morton said it was a gross overreaction.
“We think CPP is a form of payroll tax and it’s a job killer,” he told reporters.
A Toronto-Dominion Bank report on pensions last week said a growing number of Canadians will find themselves retiring with inadequate savings unless the pension system is reformed.
Employees and employers pay a combined 9.9 percent of a worker’s pay into the CPP and the Quebec Pension Plan on income of between C$3,500 ($3,400) and just over C$47,000. The fund pays out pensions to retirees, starting at age 60, as well as disability and survivor benefits.
The CPP and the QPP were created in 1966 and in the fiscal year 2007-08, paid out C$27.5 billion to 4.3 million people.