Advertisement
Canada markets closed
  • S&P/TSX

    22,167.03
    +59.95 (+0.27%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CAD/USD

    0.7387
    +0.0000 (+0.01%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • Bitcoin CAD

    94,739.67
    -1,710.81 (-1.77%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • RUSSELL 2000

    2,124.55
    +10.20 (+0.48%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • NASDAQ

    16,379.46
    -20.06 (-0.12%)
     
  • VOLATILITY

    13.01
    0.00 (0.00%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • CAD/EUR

    0.6843
    0.0000 (0.00%)
     

CPP reform on hold until economy improves

Finance Minister Jim Flaherty talks to media after meeting with his provincial counterparts in Chelsea, Que., Monday December 16, 2013. THE CANADIAN PRESS/Adrian Wyld

All that battle-ready rhetoric leading into today’s great big debate on the great Big Canada Pension Plan took its toll on Jim Flaherty.

Canada’s finance minister emerged from Monday’s epic meeting with his provincial and territorial counterparts with a throat so sore that he was forced to turn over a Q&A with reporters on potential changes to the national pension plan to Kevin Sorenson, federal minister of state for finance.

The message? There will be no mandatory increase the CPP. Not right now.

You could almost hear small business owners around the country breathing a collective sigh of relief.

ADVERTISEMENT

Some provinces have expressed a strong appetite for enriching the pension plan, arguing it will better enable middle-class Canadians to save for a retirement many of us won’t otherwise be able to afford.

For approval, CPP enhancement would require seven provinces representing two thirds of the population to be onboard. So far, there are six: Ontario, PEI, Nova Scotia, Newfoundland, Manitoba and Quebec.

British Columbia, Saskatchewan and New Brunswick have remained reluctant to embrace a mandatory increase to pension rates. That sentiment is even stronger in renegade Alberta, where youthful optimism bolstered by a robust economy has pushed thoughts of retirement out of mind and off the political agenda.

It’s no easy subject to get a handle on. Financial analysts and policy watchers alike are equally divided when it comes to the CPP and the best way to help Canadians comfortably transition out of the workplace.

On the one hand, some say we need a beefed-up, government-enforced plan in place because most of us are doing a pretty poor job of saving for retirement on our own.

All we have to do is look to today’s retirees to see how woefully equipped future generations will be without some kind of change to the CPP, said Kevin Milligan, assistant professor at the University of B.C.’s Vancouver School of Economics, in an interview with Yahoo Canada Finance.

“There is a share of population who is hitting retirement without sufficient resources,” Milligan said, referring to studies that suggest the average Canadian Baby Boomer is hundreds of thousands of dollars short of his or her retirement goals.

Others warn mandatory hikes to CPP will hurt business by costing employers more. That could mean lower earnings and fewer job opportunities for our youngest workers.

A recent poll by the Canadian Federation of Independent Businesses found 75 per cent of its members would be under pressure to freeze or cut salaries if faced with a CPP hike.

Flaherty, through his colleague, Sorenson, confirmed Monday he shared a sense of caution. The economy is still too fragile to move ahead with any bold plans that will put further financial strain on business.

It may be years before we see the pension pot sweetened.

In the meantime, Flaherty (before he lost his voice) called on the provinces to lower their weapons and their expectations.

"You don't need a bazooka to go after a specific issue, you want to be more targeted, more precise," he said.