P.E.I. says no thanks to Ontario pension plan

Teresa Wright
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FILE PHOTO: Finance Minister Wes Sheridan.

Will instead continue to push Ottawa for CPP enhancements

Prince Edward Island is no longer interested in joining Ontario’s plans to create a new provincial pension plan, but will instead continue to push Ottawa for CPP enhancements, says P.E.I. Finance Minister Wes Sheridan.

In March, P.E.I. Premier Robert Ghiz announced he would be 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).

Sheridan now says he will go back to trying to convince the federal government to increase premiums on the existing CPP, rather than creating a whole new, separate pension plan that would only apply to a few provinces.

“We don’t have to reinvent the wheel,” Sheridan said.

“It would be creating further red tape if we had to have a new plan, whereas if we just had an enhancement (to CPP) it still is just one deduction and very simple for the employer to enact.”

Sheridan spent the better part of last year pitching the notion of raising CPP premiums in order boost the future pensions of Canadians who are not saving enough for retirement.

Sheridan’s plan would see CPP contributions for both workers and employers hiked in order to boost the current maximum payout for retirees of $12,150 a year to $23,400.

During a meeting of the country’s finance minister last December, Sheridan did gain consensus among the ministers to adopt the idea, but former federal Finance Minister Jim Flaherty rejected it.

Now Sheridan says he is going to try again.

“My point is that we have to continue a pan-Canadian solution and CPP is the best vehicle for saving anywhere in the world today,” Sheridan said.

Not everyone is in favour of this idea.

Dan Kelly, president of the Canadian Federation of Independent Business, travelled to Charlottetown this week hoping to convince P.E.I. not to join Ontario’s plans to implement a new provincial pension plan.

Kelly is also against Sheridan’s idea to boost retirement savings through the CPP, calling it a ‘payroll tax’ that would ultimately hurt workers.

“The majority of our members (small and medium sized businesses) said this would cause them to have to reduce salaries for their employees, reduce the number of hours that they employ people and/or reduce the number of jobs that they have,” Kelly said.

“While it sounds terrific to get more pension dollars, this would come at a very considerable cost.”

He and other business groups say the best way for Canadians to save for retirement is through voluntary measures like Pooled Registered Pension Plans.

Sheridan strongly disagrees. He calls such voluntary plans “RRSPs with lipstick,” claiming Canadians are simply not using these tools to save enough for their retirements.

“If it’s not a forced savings plan, (people) are not going to opt in because the needs and wants of tomorrow do not come into play as much as the needs and wants of today.”

Despite the fact P.E.I. no longer plans to join the Ontario Retirement Pension Plan, the Island does remain a member of technical advisory committee for the ORPP.

“This is just in case we can’t change the mindset in Ottawa,” Sheridan added.

twright@theguardian.pe.ca

Twitter.com/GuardianTeresa

Organizations: Canadian Federation of Independent Business, Ontario Retirement Pension Plan

Geographic location: Ontario, Prince Edward Island, Manitoba Charlottetown Ottawa

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Recent comments

  • Garth Staples
    July 11, 2014 - 12:46

    A well beaten path to Ottawa and the Harper Govt.

  • albert
    July 11, 2014 - 10:58

    "the Island remain a member of the technical advisory committee for the ORPP" says Wes. Thank goodness for that, it will give the taxpayers an opportunity to foot the bills for trips for him and the Premier to Toronto now and then. - Get off the train, Wes, it is not going anywhere, - and we are sick of paying for useless ideas.

  • richmond
    July 11, 2014 - 10:49

    Not such a good idea after all, eh Wes, - you should probably pack it in before the next election your credibility has been shot for some time, - between you and Ghiz, we have some team there ---

  • a start
    July 11, 2014 - 09:32

    Sheridan could start, if he is really serious, by reestablishing INDEXING to the provincial income tax exemption-what a hypocrit!

    • The Observer from Stratford
      July 11, 2014 - 12:08

      Agree, agree. When indexing stopped it was only few bucks short of the feds. Now the difference is thousands of dollars, equivalent t to how much inflation has eroded everything in the meantime. It is time PEI began indexing again. This is something all on PEI deserve.

  • Papa
    July 11, 2014 - 09:11

    well, well, well, I thought Wes had invented and convinced the Feds that this (his supposedly) was the best idea since sliced bread. What happened? Was he not the guru he and Ghiz tried to ell us he was? I thought he had Flaherty's ear (RIP) and the Feds were running with this. Oh well at least it got the liberals elected in Ontario, although Uncle MGinty has gone into hiding in the US.

  • The Observer from Stratford
    July 11, 2014 - 08:17

    Ghiz never intended to join Ontario's plan but at least it helped to get a fellow Liberal reelected.

  • bob from cardigan
    July 11, 2014 - 07:51

    i dont need these clowns telling me how to save my money thank you very much.

    • So Bob
      July 11, 2014 - 09:39

      With our aging population just who do you think will come up with the shortfall for all the seniors who throughout the years thought they could live off $12K a year?? If the employee doesn't have enough sense to save for retirement - then the government is attempting to do it for them. Sad but true.

  • Good grief
    July 11, 2014 - 07:42

    Another example of us being screwed over. Do islanders honestly think that they have better ideas than those out of Ontario?

  • mike
    July 11, 2014 - 07:42

    Taxes are high but I agree with the CPP increase. In the short term it will cover payments needed to be made to the aging population. And also allow for more money when the younger generation retires. In truth who would ever think you could live of 12 K a year. The one other issue is businesses in canada and the USA also pay their employees garbage. If looking at Australia the cost of living is slightly higher. But not a lot and people get paid $16.87 AU which is almost equal to the canadian dollar. I read a story about a worker at macdonalds (non manager) making 21 dollars an hour and their meals are only 50 cents more. My question is how do businesses get off saying any increase of a few hundred dollars a year or even a few thousand will cause them to shut down. If you have a decent small business at all stop taking 95 percent out of the company, pay your employees a decent wage. Maybe more regulations need to be put in place for businesses, stop making all your staff part time so you dont have to pay benefits, pay a decent wage, paid sick days. ect. looking at the state of Canada compared to other countries like Australia and Switzerland we need to change the way we tax, run payroll, pensions and basically the entire state of affairs of this country before we go bankrupt.

  • John G
    July 11, 2014 - 06:42

    It makes so much sense to start the process of implementing this. But its not a vote getter so it won't happen.'