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CPP premium hike denounced as a job killer
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CBC News
The Canadian Federation of Independent Business on Friday urged Canada’s finance ministers to resist calls for an increase in Canada Pension Plan premiums.
The federal, provincial and territorial finance ministers meet in Victoria this weekend and Monday.
Many governments and the Canadian Labour Congress have called for an increase in benefits, but also premiums to pay for them.
"With ongoing hikes in employment insurance premiums, many workers' compensation levies as well as provincial minimum wages, small employers cannot afford another increase in mandatory payroll taxes," CFIB senior vice-president Dan Kelly said.
The CFIB earlier released a study suggesting the Canadian Labour Congress’s proposal to double CPP benefits would kill 1.2 million person years of employment in the short term.
Instead, the CFIB endorsed the idea of pooled registered pension plans, or PRPPs, which the federal government is introducing.
"This new vehicle should be allowed to work before any contemplation is given to other costly approaches," Kelly said.
PRPPs are aimed at self-employed Canadians and especially at those in smaller workplaces where no company pension plan is in place. They would be voluntary, but employees will automatically be enrolled in any PRPP offered by the employer unless they chose to opt out.
Businesses would also not be forced to contribute anything to them. Pension payouts would depend on financial market returns.
Shortfall a 'looming fiscal time-bomb'
But the CFIB expressed concern that some provinces may force small firms to register for PRPPs and auto-enroll all employees, adding to employers’ burden of red tape.
The federal Finance Department published draft proposals for legislation enabling PRPPs on its website Wednesday.
The finance ministers’ meeting comes amid continuing concern about a shortfall in contributions to meet expected payouts — what are known as unfunded liabilities — in public sector pensions.
In a study released Tuesday, the C.D. Howe Institute said Ottawa's unfunded liability for public-sector pension plans is more likely $227 billion — $80 billion more than reported in the federal government's public accounts — because it hasn’t used market yields to calculate what they will eventually owe pensioners.
Pension experts have said Canadians are heading toward a big retirement income gap.
Only 34 per cent of Canadians are covered by a workplace pension plan, about a third have no retirement savings at all and the median amount in an RRSP for workers 55 and older is just $60,000.
The CFIB called the shortfall a “looming fiscal time-bomb” and urged all levels of government to move quickly to address the problem.
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