In June, the nation’s finance ministers convened in Charlottetown to set the direction for pension reform. Hopes were high that consensus on a pan-Canadian approach would emerge. However, amid limited detail on what was agreed, one clear question remains: Is the window about to close on an historic opportunity for harmonization?
Initially, the meetings appeared to end in agreement on “modest, gradual, fully funded phasing-in of additional mandatory CPP benefits.” Then, Alberta’s minister, Ted Morton, quickly indicated his government’s dissent, stating that CPP changes are “not a targeted response” to the issue, while the Quebec government was non-committal. Any changes to the Canada Pension Plan (CPP)/Quebec Pension Plan require the consent of two-thirds of the provinces with two-thirds of the population, meaning such reforms are hardly guaranteed.
The ministers also agreed to two other items while in Charlottetown. First, they decided that no voluntary add-on to the CPP would be created. Second, they agreed to continue to work toward pension innovation within the private sector, with particular emphasis on multi-employer structures.
The focus on innovation is promising. But the emphasis on such multi-employer structures can be seen as a further attempt to find a pan-Canadian “silver bullet.” What appears to have been lacking in the dialogue is any effort dedicated to the more difficult task of pension harmonization generally.
Canada’s needlessly complex patchwork quilt of pension legislation creates significant challenges for sponsors of multi-jurisdictional plans and has an impact on the mobility of Canadian workers. A number of cases in recent years—including Boucher v. Stelco and Québec (Régie des rentes) v. Ontario (Commission des régimes de retraite)—have highlighted the types of disputes that can arise among sponsors, members and regulators. These issues emphasize the challenges in administering plans across provincial borders. While harmonization of those myriad standards is a difficult and labour-intensive exercise, the need is no less valid for plan sponsors and employees.
Reports of expert commissions and numerous commentaries from academic, labour and professional organizations set the stage for discussion of similarities and differences in the existing standards. More importantly, they provided significant and timely visions for how the standards could or should be improved going forward. All that was then required was the will to broaden the discussion beyond the improvement of individual provinces’ legislation to co-ordinated improvement of the pan-Canadian system. However, that possibility seems to have been lost in the desire to find single-solution approaches.
In the meantime, individual governments are forging ahead with their own reforms: the federal government through Bill C-9 and the Ontario government with Bill 236.
Notably, statements made by Morton prior to and following the Charlottetown meetings confirm that Alberta and B.C. continue to work together toward fully harmonized legislation in those two provinces. Morton also confirmed that the provinces are still considering implementation of plans facilitated by government, noting that “options worth exploring further include pension innovation and supplementary pension plans.” The fact that two provinces with significant economic importance in Canada remain committed to such efforts should serve as an example to the rest of the country that harmonization is attainable.
Ironically, though, those two provinces have very different views on securities regulation. The fact that Alberta remains a vocal critic of a national securities regulator should not be overlooked. However, the current political and legal disputes in the securities area bring into question whether pension standards harmonization will become a political victim of the securities regulation battle.
The reasons for the lack of national debate on harmonized standards remain unclear. Without immediate concerted action, the prospect of various governments “going it alone” further reduces the likelihood of national harmonization and increases the risk of “regionalization” of pension standards in Canada. Whatever the case may be, the benefits to Canadian plan sponsors and employees of increased national harmonization make getting past the politics worth the effort. BC
Chris Brown is managing partner with Spectrum HR Law LLP in Calgary. cbrown@spectrumhrlaw.com
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© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the October 2010 edition of BENEFITS CANADA magazine.