Pension Pundit: Enter the politics

Perhaps it’s only natural, considering the solution to our pension woes will be imposed by the government. Still, it is strange to see Alberta’s Finance Minister—whose predecessor (from the same government) was one of the most ardent supporters of federal leadership on the issue—isolate his province by refusing to support an expanded Canada Pension Plan (CPP).

Is it the best solution? Probably not. But from a political point of view, it’s likely the path of least resistance and one which has a reasonable chance of providing an improvement in retirement benefits for the greatest number of Canadians. And in the aftermath of a global economic meltdown, trusting large financial institutions with a bigger slice of the retirement industry pie isn’t exactly a vote getter.

However, Ted Morton’s assertion that the solution would kill jobs and limit people’s choices seems a bit of a stretch.

“You’re not going to have a choice,” he told reporters following Flaherty’s announcement. “It’s going to reduce what’s in your paycheque at the end; the government is making choices for you.”

Could it be that the Alberta Conservatives—with the Wildrose Alliance threatening their 39-year reign—are seeking to bolster their conservative credentials? While not delivered at as fevered a pitch, Morton’s remarks are reminiscent of the opposition to the Obama administration’s healthcare reforms, who accused the President of “getting between you and your healthcare provider”.

As demonstrated by the federal government over the past 18 months, the Conservative brand has drifted from its strict fiscal doctrine in order to hold onto votes, resulting in an alienated conservative base. In the U.S., Republicans are falling over one another in their efforts to appease the Tea Partiers. And in Canada, Wildrose is as close as to Tea Party as you’re going to get.

Morton does have one ally in the Canadian Federation of Independent Business, which dismisses the expanded CPP as an additional payroll tax. Apart from that, stakeholders are either fully behind the move or are playing their cards close to their chests. Unions are fully behind it, although they’d like it to go further, and the idea of expanded participation in multi-employer pension plans—as well as a push for increased financial literacy—has the Canadian Life and Health Insurance Association onside.

So the sleepy issue of pensions has united unions and the private sector while leaving the most right-of-centre province out in the cold. Meanwhile, Quebec is silent.

Politics makes for strange bedfellows indeed.

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