TORONTO – Canada is headed for a “huge economic crisis” if the provinces and federal government don’t take action now to improve retirement incomes, Ontario Premier Kathleen Wynne warned Tuesday.
“One of our fundamental priorities is retirement income security, especially for the middle class,” Wynne told a business audience in Toronto.
“People are not saving enough for retirement and if we let this go unchecked we’re going to face a huge economic crisis.”
Ontario’s Liberal government recently announced it would create a provincial retirement income plan if it can’t convince Ottawa and the other provinces to enhance the Canada Pension Plan.
“I believe that governments have to ensure a reliable and responsible retirement income system, one that evolves and responds to the practical realities of the times that we’re dealing with,” Wynne told the ACG Capital Connections conference.
“So we’re taking the lead in Ontario on that conversation across Canada, to make sure that we’re thinking ahead and making sure that everyone in this province is prepared for retirement.”
Wynne will raise the retirement income issue with the other provincial and territorial leaders when they meet Friday in Toronto.
“I will be meeting with my colleague premiers at the end of the week and will be talking about that as one aspect of our relationship,” she said.
Ontario is not the only province that has been pushing for action on the CPP for the past several years. Prince Edward Island wants to boost maximum CPP contributions to $4,681.20 a year from $2,356.20 starting in 2016, and also increase the maximum annual benefit to $23,400 from $12,150.
Quebec and Alberta have opposed CPP reform, which last week federal Finance Minister Jim Flaherty agreed was a good idea. However, Flaherty said it should only be considered when the economy is stronger.
“It’s a payroll tax on employers and employees,” warned Flaherty. “I don’t think the idea is a bad idea, I just think the economy has to be able to afford it at the appropriate time.”
Wynne said the slow economic recovery is not an excuse to avoid boosting CPP contributions and benefits.
“The way I frame it to my colleagues and to the people who say to me ‘We can’t afford to do that (because) the economy is too fragile,’ my response is if we don’t find a way to do this now, we will pay later,” she said. “So we make a choice about whether we plan or whether we react.”
In December 2010, Ottawa and the provinces agreed to a half-way measure by creating so-called voluntary pooled registered plans, but Ontario says that’s not enough.
Several business lobby groups have opposed enhancing the CPP, instead advocating for Canadians to find alternate plans for retirement, including the pooled pension plans and other forms of savings without increasing the cost to businesses.
Ontario also intends to push the pension reform issue when the provincial and territorial finance ministers meet with Flaherty in Meech Lake, Que., next month.
Note to readers: CORRECTS last line to finance ministers meeting, NOT first ministers