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LEGAL REPORT: LABOUR & EMP LOYMENT Planning ahead The debate over pension reform has the provinces, businesses, and unions vying for influence. BY ANDI BALLA reforming Canada's pension system, there was general agreement that something needed to be done to ensure Canadians save enough for retirement. However, different jurisdictions can't agree on the specifics needed to achieve the goal. The conclusion put forward by several W provinces is that many middle-income Canadians aren't saving enough for retirement and therefore their retirement income will be significantly lower than it was while they were working. That's because many people don't belong to pension funds, are not taking advantage of or don't have access to registered pension plans, or choose not to access other savings options, according to several recent studies. Sometimes even people with significant income haven't made appropriate retirement saving plans. "People find it difficult to save on their own," says Bruce Macnaughton, director of pension and income security policy at Ontario's Ministry of Finance. "Many people don't have investment expertise, and the fees if you invest on your own are much higher than the fees for institutional investors." hen federal and provincial finance ministers met in Prince Edward Island in June to discuss In P.E.I., finance ministers agreed to look at a two-track reform process. One is to expand mandatory Canada Pension Plan contributions by a modest amount, which is still under discussion. Macnaughton says, "The CPP changes are attractive to the employers because it means they don't have to get engaged in pension administration at all, and it includes the self-employed." The other reform would facilitate voluntary defined-contribution plans, including the introduction of multi-employer plans. According to a report by the Canadian Association of Retired Persons, 11 million Canadians, or 60 per cent of workers, don't have a workplace pension plan. "Right now many small employers don't have pension plans. That is hard because of the administrative burden of collecting the money, getting a trustee, getting a professional adviser is quite high. It's quite burdensome," says Macnaughton. "So what's being discussed is allowing financial institutions like insurance companies and banks to be the administrators of defined, voluntary insurance plans so employers can opt into a multi-employer plan, so they would not have to run the plan themselves." This option would allow the self-employed to join any of the multi- employer plans that would be introduced in their jurisdictions. The CPP issue is the hot political potato. Led by Canada's powerful unions, some have proposed dramatic increases in CPP contributions, even doubling it. Many businesses oppose it. The CPP can only be reformed with the support of provinces representing two thirds of the population. Like many things in Canadian politics, there is a geographical split in support. Ontario supports increasing the CPP. "I believe we should seriously consider building on the strengths of the CPP through a phased- in, moderate increase to retirement and survivor benefits," wrote Ontario Finance Minister Dwight Duncan in a letter to his colleagues in P.E.I. "CPP's guaranteed benefits are secure, inflation-indexed, and portable. . . . Any improvements would have to be pre-funded, intergenerationally equitable, and affordable for working people and employers." Duncan added that the new porting of the CPP expansion would have to be fully funded, meaning people would pay for their own benefits in the expansion portion, not for current CPP users. The CPP is an intergenerational transfer in www. C ANADIAN Law ye rmag.com A UGUST 2010 47 JOE WEISSMANN