P.E.I. Premier Robert Ghiz was in Toronto Wednesday where he announced he is working with Ontario Premier Kathleen Wynne and Manitoba Premier Greg Selinger to develop a provincial pension plan
© Canadian Press photo
Ontario Premier Kathleen Wynne met with P.E.I. Premier Robert Ghiz Wednesday about improving the Canadian Pension Plan.
Prince Edward Island is teaming up with Ontario and Manitoba to develop a provincial pension plan that would supplement retirement income, but business groups are raising concern over this initiative, calling it a ‘payroll tax.’
P.E.I. Premier Robert Ghiz was in Toronto Wednesday where he announced he is working with Ontario Premier Kathleen Wynne and Manitoba Premier Greg Selinger to develop a provincial pension plan that would act as a supplement to the current Canadian Pension Plan (CPP).
“We know that we’ve got an aging population, that retirement security is important and that when it comes to private sector pension plans, we have among the lowest rates in the country for participation in them,” Ghiz said in a telephone interview from Toronto.
“We want to look at long-range plans to help ensure that there’s going to be adequate retirement plans for our seniors.”
The P.E.I. government has been front and centre in a national dialogue on the need for pension enhancements for the last several months.
Finance Minister Wes Sheridan pitched the notion of boosting the CPP by raising premiums and did gain consensus among the country’s finance ministers on the idea, but federal Finance Minister Jim Flaherty rejected it in December.
Ontario has since decided to move ahead with its own pension improvements, and now P.E.I. and Manitoba are also on board.
But the Canadian Federation of Independent Business says small business owners have expressed firm opposition to any plan that would see employers having to pay into a mandatory pension plan.
“Essentially it acts as a payroll tax,” said P.E.I. CFIB spokeswoman Erin McGrath-Gaudet.
“Anytime you’re making it more expensive to employ people, that has impacts on small business, that has impacts on the workforce, that has impacts on the economy as a whole.”
A mandatory provincial pension plan would not only be a financial strain for employers, but also for workers, who could pay as much as $1,100 more a year in premiums, she said.
A public opinion poll conducted for the Canadian Federation of Independent Business (CFIB) by Angus Reid Global in 2013, found 65 per cent of working Canadians said they could not afford to save any more than they were already saving for retirement.
McGrath-Gaudet added that P.E.I. is already one of the highest-taxed jurisdictions in the country.
“Even things like the (provincial) fees and permits and licences in the last few years have gone up and now we’re going to start taking more money off of people’s paychecks?” McGrath-Gaudet said.
“We’re already seeing a lot of out-migration specifically because people are trying to make ends meet in this province, there’s a lot of challenges here… this is certainly not going to make it any easier.”
But Ghiz says when seniors don’t have enough money for retirement, it has negative impacts on the health system and social programs.
“Yes, it’s going to be a bit difficult… but this is essentially finding a way to enhance retirement incomes. And realistically right now retirement incomes are not keeping up with what retirees need, so this is a way to work on a long-term solution.”
P.E.I. and Manitoba will join Ontario’s Technical Advisory Group on Retirement Security. They will explore the most effective alternatives to a CPP enhancement.
Ghiz added nothing would change immediately. Any possible implementation would not likely happen until 2017.