Hey there, time traveller!
This article was published 1/11/2013 (1390 days ago), so information in it may no longer be current.
Pension reform moved slightly forward Friday -- slightly being the key word -- at a meeting in Toronto of Canada's provincial and territorial finance ministers.
At the table was Manitoba's new Finance Minister Jennifer Howard, nine days on the job, cast in a position of discussing changes to the country's retirement income system. It's a system many say is in need of a major overhaul so middle-income Canadians can retire without seeing a significant decline in their standard of living.
'All finance ministers agree that Canadians just aren't going to have enough retirement income in the future'--Manitoba Finance Minister Jennifer Howard
"All finance ministers agree that Canadians just aren't going to have enough retirement income in the future," Howard said after the meeting wrapped up. "The Canada Pension Plan average benefit right now that someone receives from it is $500 a month. In no one's mind is that adequate to retire."
A number of ideas on how to improve pension benefits are on the table. Ontario is eyeing creating its own pension plan and Prince Edward Island has suggested increasing maximum CPP contributions to $4,681.20 a year from $2,356.20 starting in 2016, and boosting the maximum annual benefit to $23,400 from $12,150. Neither found unanimity at Friday's meeting.
Instead, the provinces only agreed to keep talking with a focus on any future reforms being responsible and fully funded. Any reforms must also cushion the short-term effects on businesses, families and the economy from any increases in pension contributions. Ministers said reforms need to improve future retirement incomes of middle-income earners and protect lower-income workers.
Howard said these principles would underline a future expansion of the CPP.
"As the economy improves we believe business can probably handle a modest increase to pension contributions," Howard said.
She said what's likely not in the cards is a move advocated by some to raise the age of eligibility for the CPP enhancement to between 68 and 70. That's because the federal government has announced the age limit for receiving Old Age Security will rise to 67 from 65, starting in 2023.
"That is going to cost provinces because we will be on the hook to pick up for people who don't have an income between 65 and 67," Howard said. "My hope is if we can get an expanded CPP that might help those people who are now going to have to wait an extra two years to be eligible for OAS."
Howard said Manitoba is, at this point, leaning towards P.E.I.'s proposal, but more details have to be worked out.
"What was good about today is that you have governments of all stripes together saying we have to do something. Canadians aren't going to have secure retirements unless we do something."