Provincial Finance Minister Wes Sheridan addresses the membership of the Greater Summerside Chamber of Commerce. Journal Pioneer File Photo/
Prince Edward Island is no longer interested in joining Ontario’s plans to create a new provincial pension plan, but will instead continue to push Ottawa for CPP enhancements, says P.E.I. Finance Minister Wes Sheridan.
In March, P.E.I. Premier Robert Ghiz announced he would be working with Ontario Premier Kathleen Wynne and Manitoba Premier Greg Selinger to develop a provincial pension plan that would act as a supplement to the current Canadian Pension Plan (CPP).
Sheridan now says he will go back to trying to convince the federal government to increase premiums on the existing CPP, rather than creating a whole new, separate pension plan that would only apply to a few provinces.
“We don’t have to reinvent the wheel,” Sheridan said.
“It would be creating further red tape if we had to have a new plan, whereas if we just had an enhancement (to CPP) it still is just one deduction and very simple for the employer to enact.”
Sheridan spent the better part of last year pitching the notion of raising CPP premiums in order boost the future pensions of Canadians who are not saving enough for retirement.
Sheridan’s plan would see CPP contributions for both workers and employers hiked in order to boost the current maximum payout for retirees of $12,150 a year to $23,400.
During a meeting of the country’s finance minister last December, Sheridan did gain consensus among the ministers to adopt the idea, but former federal Finance Minister Jim Flaherty rejected it.
Now Sheridan says he is going to try again.
“My point is that we have to continue a pan-Canadian solution and CPP is the best vehicle for saving anywhere in the world today,” Sheridan said.
Not everyone is in favour of this idea.
Dan Kelly, president of the Canadian Federation of Independent Business, travelled to Charlottetown this week hoping to convince P.E.I. not to join Ontario’s plans to implement a new provincial pension plan.
Kelly is also against Sheridan’s idea to boost retirement savings through the CPP, calling it a ‘payroll tax’ that would ultimately hurt workers.
“The majority of our members (small and medium sized businesses) said this would cause them to have to reduce salaries for their employees, reduce the number of hours that they employ people and/or reduce the number of jobs that they have,” Kelly said.
“While it sounds terrific to get more pension dollars, this would come at a very considerable cost.”
He and other business groups say the best way for Canadians to save for retirement is through voluntary measures like Pooled Registered Pension Plans.
Sheridan strongly disagrees. He calls such voluntary plans “RRSPs with lipstick,” claiming Canadians are simply not using these tools to save enough for their retirements.
“If it’s not a forced savings plan, (people) are not going to opt in because the needs and wants of tomorrow do not come into play as much as the needs and wants of today.”
Despite the fact P.E.I. no longer plans to join the Ontario Retirement Pension Plan, the Island does remain a member of technical advisory committee for the ORPP.
“This is just in case we can’t change the mindset in Ottawa,” Sheridan added.