Richer Canada Pension Plan going ahead, amid questions of New Brunswick's struggling economy - Telegraph Journal
ADAM HURAS Telegraph Journal March 28, 2016
Beauséjour MP and House Leader Dominic LeBlanc says it’s not the federal government intention to “impose” a richer Canada Pension Plan on the provinces.
But LeBlanc believes an enhancement will soon go ahead - with the support of the provinces.
The federal government wants to enhance the CPP by the end of the year - even as questions remain as to whether New Brunswick’s struggling economy can handle any changes to how much employees and employers contribute.
The government began discussions on enhancing the pension plan with provinces and territories last year - although with little to show for it - and now has the goal “of being able to make a collective decision before the end of 2016,” according to the federal budget.
“The best way to improve the retirement security of the biggest number of Canadians is to improve the CPP program,” LeBlanc said in an interview with the Telegraph-Journal. “We have also been clear that the minister of Finance has to negotiate that with the provinces.
“It’s not our intention to impose something.”
LeBlanc added: “But from what the minister of Finance tells us, he’s optimistic that we can find the right balance where there can be an improvement in the Canada Pension Plan phased in over the appropriate amount of time, cognisant of the concerns of businesses in the provinces around increasing payroll taxes.”
The Canada Pension Plan requires workers over the age of 18 and employers to make mandatory contributions based on employment income.
The maximum annual contribution for employers and employees currently stands at $2,544.30 each.
Upon retirement, contributors then receive a retirement pension based on how much they paid in.
That’s as much as $1092.50 per month in 2016.
The average stands at $629.33.
The debate is whether that’s enough, if Canadians are saving enough on their own, and if people could pay in more now on a mandatory basis to receive more later.
It’s fraught with polarizing opinions.
The anti-poverty group Common Front for Social Justice has highlighted the CPP budget commitment, among other initiatives brought forward by the federal Liberals, as a move that will “help low-income citizens.”
In pressing the Gallant government for its stance, Green Party Leader David Coon has stated that two thirds of Canadians have no workplace pension plan, and only one quarter contribute to a Registered Retirement Savings Plan.
For many, that leaves only the Canada Pension Plan - no longer sufficient to meet the basic needs of seniors, according to Coon.
“I am concerned that a growing number of New Brunswickers will not have sufficient income in their retirement,” he said. “I know that some low income seniors in my riding find themselves having to make unacceptable trade-offs, deciding whether to buy groceries or fill their prescriptions, for example.”
Meanwhile, Fredericton Chamber of Commerce CEO Krista Ross maintains an increase in the CPP would negatively impact businesses already struggling in a sluggish economy.
“Businesses are just not able to absorb more taxes at this time,” Ross said. “It has been a challenging economic time and it’s a fragile economy, businesses are struggling and we need to create that environment that allows them the opportunity to stay on their feet.”
The Canadian Federation of Independent Business has also repeatedly stated that it doesn’t see any room for what it maintains are essentially “giant payroll tax increases.”
The Fraser Institute has highlighted that existing rules for CPP contributions already require $4,960 annually in employer and employee contributions for a single working Canadian making $53,600 in 2015.
“An expanded CPP could produce a marked increase in the average Canadian family’s total tax bill, leaving less money available for families to allocate as they wish,” the Fraser Institute’s Charles Lammam and Niels Veldhuis said in a recent opinion piece.
Finance Minister Roger Melanson attended December meetings in Ottawa with Federal Finance Minister Bill Morneau and regional finance ministers that largely focused on whether to enhance the Canada Pension Plan.
Little ground was made.
“We did not commit to any end game,” Morneau said in December. “Nor was that our objective today.
“Our objective today was to begin a process to review the potential to move forward.”
Melanson has said his Liberal government is open to discussing an enhancement to the Canada Pension Plan, but also added that the province’s businesses needed to be a consideration in any way forward.
“If there are any changes, it’s got to be done right,” Melanson said. “All we have agreed to is a process.
“We haven’t agreed to any changes.”
The finance ministers are expected to meet again in June.
LeBlanc insists a path forward will be found.
“I’m optimistic that he (Morneau) will be sensitive to that economic concern, but nonetheless we can find a serious improvement in CPP,” he said.