Pension reforms in the works

Photo: The Canadian Press. All rights reserved.

Minister of Finance Jim Flaherty speaks with the media in the foyer of the House of Commons, Friday, December 14, 2012 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

Canada's fragile economy, deficits and pension reform, and possibly smoothing over ruffled feathers, top the list of issues confronting federal and provincial finance ministers meeting in Ottawa today and Monday.

The last time the ministers got together a year ago, Finance Minister Jim Flaherty angered many of his provincial counterparts by announcing he was unilaterally imposing cuts to future health transfers.

This time the minister says he is making no substantive changes to any of the federal programs, although some disgruntled provinces are likely to ask for a better shake.

The most contentious issue will likely be pension reform, the key topic two years back, with Ontario again pushing for an expansion of the Canada Pension Plan.

Ottawa is expected to place several plans on the table for discussion, but not for implementation.

On Sunday, Ontario Finance Minister Dwight Duncan said Ottawa should move again on CPP reform even without unanimity, something Flaherty has said he wants before progressing on the issue.

Duncan said he believed there was enough support from two thirds of the provinces representing two thirds of the population to expand CPP.

On Friday, Flaherty told reporters the economy should be the top priority and that it is too weak to contemplate boosting CPP benefits at this time because employers would have to pay higher premiums.

"This is not the time to put another burden on employers and dampen employment prospects of Canadians," he said, adding that such a proposal would make much more sense once the economy has recovered fully.

That's also the view of Saskatchewan Finance Minister Ken Krawetz, who said while he might support modest tweaks, any "radical changes" to CPP are out of the question.

Two years ago, when enriching CPP was under active consideration, the weak economy and the opposition of Alberta and Quebec were cited by Ottawa for withdrawing its support for the idea.

In its place, Ottawa proposed a voluntary program whereby employees in small and medium firms can voluntarily pool savings, although employers are not obliged to contribute.

Federal legislation for the so-called Registered Pooled Pension Plan concept was officially enacted Friday, but it still requires the provinces to put it into practice.