Flaherty hints at private sector pension solution

Speaking to reporters ahead of the National Retirement Income Summit in Calgary on Monday, Flaherty was cool to suggestions by labour groups that the Canada Pension Plan benefit be doubled, citing risks to business and its effect on the economy. When questioned on the feasibility of a new national voluntary supplementary pension plan, he described what he saw as an “administrative burden” for those who would oversee it.

However, on the subject of an increased role for private sector insurers and other financial organizations in the retirement industry, Flaherty noted the “success in that area” achieved to date by the private sector and that the key to reform would be to “tread carefully” and “do no harm”.

As of Tuesday afternoon, Alberta’s finance minister appeared to be backing Flaherty, announcing that he will not co-operate with moves to build a bigger Canada Pension Plan and would prefer an “incremental approach”.

Ted Morton told the Canadian Press that he would rather see regulatory changes made to give financial institutions a chance to help Canadians to save for retirement. Such companies should be given a 10 year window to achieve results before government dictates the pension agenda, he said.

“There seems to be some consensus growing” regarding a private sector solution, he told reporters. However, he added that his remarks are not the official position of the Alberta government, as consultations are currently underway and he has yet to confer with his provincial counterparts at the upcoming ministerial meetings in June.

In any event, decisive action on the retirement front is a long way off, as Flaherty explained that the issue will require months of study before conclusions are made.

The Finance Minister is currently engaged in a series of consultations across the country to solicit input from stakeholders on the issue of retirement. However, questions have been raised about the campaign, as it is the second such tour in as many years—Parliamentary Secretary Ted Menzies conducted an extensive tour in 2009—and is by invitation only at some locations.

Flaherty is also facing uncomfortable questions over the “gold-plated” pensions enjoyed by Members of Parliament after a National Post article suggested the parliamentary pension plan grew by 10% during the recession while the average private sector plan lost 21% of its value the Canada Pension Plan fell by 14%.

The Finance Minister is playing down the idea of a retirement system in crisis, noting that Canada’s pension system is the “envy of the world” and that Canadians need to save more for their golden years as opposed to looking to the government for help.

“I think it is a significant issue, but I do not think it is an issue of fundamental unsoundness in our system,” he said. “Most countries envy the solidity of our plan, so we start from a relatively good place, but that doesn’t mean there aren’t issues that we can address.”

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