As I write this, the first federal election campaign of 2011 is entering the home stretch. I say “first,” because the discordant tenor of the election rhetoric leads one to wonder how another minority government might possibly function for any length of time.
From my perspective, the most exciting part of this election is that pensions have seldom enjoyed such prominence as a core election issue. Unfortunately, although pensions as an issue are mentioned almost every day in this election campaign by the party leaders, there is fairly little in the way of practical substance that differentiates the political pension rhetoric.
Here is my brief summary of the pension positions of the parties in this federal election (in alphabetical order).
Bloc Québécois
The word “pension” is not found in the Bloc’s 2011 Policy Statement. However, the document does call for “substantial improvements for the neediest of persons, [to] the Guaranteed Income Supplement…”
Conservative Party of Canada
The Conservative offer these following explicit measures:
- top up the Guaranteed Income Supplement (GIS) by up to $600 per year for single seniors and $840 for senior couples, at a cost of $300 million per year;
- double the tax-free savings account (TFSA) limit once a balanced federal budget is achieved; and
- implement the pooled retirement pension plan (PRPP)
Green Party
The Green Party advocates “Smart Economic Stimulus” including, “protecting the pensions of retired Canadians” and “reduce employment insurance and Canada pension plan (CPP) contributions for businesses” (both employee and employer contributions would be reduced by 1/3 or $23 billion per year, offset by tax shift to “carbon pricing).
Liberal Party
The Liberal Party platform has the following pension measures:
- work with the provinces and territories to enhance the CPP through “a gradual increase of the defined benefits under the core CPP to enhance the retirement security of all Canadians” and “a voluntary supplement to the CPP called the Secure Retirement Option (SRO)”. The SRO would be subject to existing RRSP limits and permit both employer and employee contributions.
- Greater protection for those collecting long-term disability (LTD) benefits in the event of employer bankruptcy
- Create a “stranded pension agency” to oversee transfer of pension assets on bankruptcy of an employer to the CPP
- Increase GIS benefits to a total of $700 million per year
New Democrat Party
The NDP’s “Practical First Step” No. 2 offers: “Strengthen your pension: We’ll work with the provinces to double your public pension and offer you more choice over your retirement savings.” The details are as follows:
- eventual goal to double CPP/QPP benefits;
- Add voluntary contributions to “individual public pension accounts” (e.g. CPP/QPP);
- put pensions and long-term disability recipients to the front of the line of creditors of bankrupt employers; and
- increase to GIS to lift “every senior in Canada out of poverty immediately.”
GIS increases are a common theme among the parties, and differentiated only by affordability relative to whether or not taxes are increased (corporate taxes in particular). Voluntary contributions to the CPP can be regarded as variations upon the PRPP concept, so there is also a degree of consensus in this area.
The Conservatives “down the road” promise to double TFSA limits the Green Party’s idea of cutting CPP contributions are clear but somewhat marginal differentiators, as are the Liberal and NDP promises relating to prioritization of LTD and pension obligations on employer bankruptcies.
The CPP enhancement promises of the Liberals and NDP are also clear differentiators from the other parties. However, it is highly unlikely that fulfilment of these promises will be achievable within the next term of a new federal government (and perhaps ever), as they would require support of at least 2/3rds of the provinces with 2/3rds of the population.
Québec’s 2011 budget, released shortly before the federal election was called, explicitly stated that CPP/QPP expansion was not a priority for Québec. Alberta has consistently opposed CPP expansion in the context of recent meetings of federal and provincial finance ministers, and last week Saskatchewan’s deputy premier and finance minister reportedly told a Canadian Pension and Benefits Institute audience that doubling of the CPP has no support from the provinces or the federal government.
When it comes to making their votes, Canadians would be wise to keep in mind the division of powers between the federal government and the provinces. Pensions are largely a matter of provincial jurisdiction, except for the application of federal income tax rules.
Pension promises that rely on provincial cooperation should be discounted heavily, particularly when a number of provinces signal disagreement.