As Finance Minister Bill Morneau meets with his provincial and territorial counterparts in Ottawa this weekend, it is expected that the Canada Pension Plan (CPP) will be one of the top items on the agenda, and industry organizations are weighing in on what might be coming down the pipeline.
“We are unlikely to have a completely wrapped-up plan, but there could be a directional approval to expand the CPP as of Monday,” said Dan Kelly, chief executive officer of Canadian Federation of Independent Business (CFIB). “The alarm bells are really ringing for small business right now.”
The Association of Canadian Pension Management (ACPM) said it encourages that discussions not be limited to the CPP. “ACPM strongly believes that retirement income challenges in Canada will be most effectively addressed by a range of targeted solutions that can be applied nationally,” said Hugh Wright, the organization’s chair of the board, in a press release. “We urge the finance ministers to resist focusing on just one element of the mix.”
Frank Swedlove, president and CEO of the Canadian Life and Health Insurance Association, agreed. “As ministers reflect on any changes to CPP, they should take into account the need to maintain a strong third pillar of private retirement savings, including the role that [pooled registered pension plans (PRPPs)] can play in improving retirement savings opportunities.”
READ: Making sense of the CPP changes
Members of the CFIB have supported the PRPP, as well as an alternative that was proposed by the Liberal government in the past – a voluntary add-on, where an employee or employer could choose to invest more money into the CPP.
“It is a big concern for our members, especially in a sluggish economy, as to where they would find an additional amount of money to put in the CPP on behalf of their employees,” added Kelly. “From a business perspective, the big concern is the economic consequences of a giant new payroll tax.”
But there are many in the industry that support the expansion, with an increase in worrying trends such as an ageing population, debt-to-income ratios, and a focus on consumption in the present rather than preparation for the future.
But the federal government alone can’t decide to expand the CPP. It requires two-thirds of the provinces representing two-thirds of the population of the country.
Despite the uncertainty, the industry may soon have more answers about CPP expansion, as all the provincial and territorial finance ministers meet with Morneau this weekend.