Pension reform faces provincial resistance

Federal Finance Minister Jim Flaherty is expected to face resistance over pension reform when he meets with his provincial and territorial counterparts Monday, with a group of six provinces calling on Ottawa to reverse course and expand the Canada Pension Plan.

Flaherty said last week he won't be proposing any CPP expansion because not all provinces were on board. Instead, he'llbe pushing a new private-sector plan allowing small firms, employees and even the self-employed to pool resources on new, low-cost pensions.

But the finance ministers of B.C., P.E.I., Nova Scotia, New Brunswick, Manitoba and Ontario issued a joint statement Sunday asking Flaherty to keep CPP expansion on the table alongside the private-sector changes he's proposing.

"The federal government needs to take a leadership role here, and they just walked away from it," Ontario Finance Minister Dwight Duncan said in an interview.

"The kinds of pension innovation ideas that we're talking about [such as the proposed private-sector plans] are an important part of the solution, but only one part. One of the most important parts is a modest increase in the Canada Pension Plan."

The provinces said the federal government should phase in a "modest," fully-funded expansion to the CPP, and make changes to provide more Canadians with low-cost pensions.

They said they support Flaherty's private-sector proposal, but insisted it shouldn't preclude Ottawa from also improving the CPP.

Duncan said Alberta appeared to be the lone holdout in supporting a CPP expansion, and he notes the federal government said it was in favour of enhancing the pension plan last June.

"It appears as though they're more concerned with what Alberta's position is than the six provinces that have signed the letter," Duncan said.

"It's just a wrong-headed decision."

P.E.I. Finance Minister Wes Sheridan said he hopes Flaherty is listening.

"We hope by speaking with him at these meetings that we can come out with a plan that includes CPP still on the table," he said in an interview.

"Mr. Flaherty's comments were that he was having trouble corralling the provinces, and I think we've shown now that there is a lot of support for this."

Critics slam Flaherty's idea

His comments last week have prompted criticism from opposition parties, provincial governments and the labour movement.

The president of the Ontario Federation of Labour, Sid Ryan, has described Flaherty's comments as a "last minute betrayal." On Friday, Ryan was among a group of protesters who occupied Flaherty's constituency office in Whitby, Ont.

The deputy leader of the federal Liberals, Ralph Goodale, said the Conservative government has turned its back on Canadians.

"Mr. Flaherty's 11th-hour scheme is woefully inadequate to address the scale of the retirement savings challenge we're facing, with three-quarters of private sector workers without any registered pension savings," Goodale said in a news release Sunday.

The federal finance minister has described the proposed private-sector pensions as a "Pooled Registered Pension Plans," which, at the earliest, could be in place by the end of 2011.

Under the federal proposal, the pooled, low-cost plans would be based on defined contributions. They would be available to any type of employee, as well as the self-employed.

Ottawa and the provinces have been discussing how best to reform the country's retirement income system for well over a year.

Last June, the provincial and federal governments said they would look at a three-pronged reform: financial literacy, regulatory changes to give the private sector more freedom to offer low-cost savings options and gradually enhancing the CPP.