ALF V1

Provincial finance ministers last week reached an agreement on a framework for the Pooled Registered Pension Plan (PRPP), a new private-sector retirement plan that aims to benefit small and medium businesses and the self-employed.

Retirement savings plans were a key topic of conversation at a finance meeting in Kananaskis last week.

"This new private-sector retirement savings vehicle will improve the range of retirement savings options available to Canadians by providing a low-cost retirement savings opportunity for employees - with or without a participating employer - and the self-employed," said federal Finance Minister Jim Flaherty, in a statement.

"PRPPs will be a major breakthrough for the Canadian pension market. They will make well-regulated, low-cost, private-sector pension plans accessible to millions of Canadians who have up to now not had access to such plans," he said.

"In fact, many employees of small- and medium-sized businesses and self-employed workers will now have access to a private pension plan for the very first time."

According to a proposed framework, the plan will enable more people to benefit from the lower investment management costs that result from membership in a large, pooled pension plan.

Regulated financial institutions will act as administrators of the plans on behalf of businesses and will be responsible for performing all of the required management and operational functions of a plan operating as a PRPP.

Businesses owners will be responsible for choosing a plan that best fits their needs and for enrolling employees in the plan.

Alberta Finance Minister Ted Morton said he was in favour of the plan, calling it the "type of targeted solution Alberta has been advocating to address concerns that many middle-income Canadians are not saving enough for their retirement," in a statement released last week.

Flaherty said finance ministers also reviewed work done on a range of options for expanding the Canada Pension Plan during their meeting last week.

Previously, Morton said he was not in favour of expanding the CPP because it would not benefit the significant majority who are not saving enough for retirement.

"That's great for a guy coming from an income of about $200,000 a year. I don't think he knows what he's talking about. I don't think he's realistic at all," said Dick Tansey, chair of the St. Albert chapter of Seniors United Now (SUN).

Tansey said he supports expanding the CPP.

"For 2010, I think the increase was 0.4 per cent, compared to what other people are getting for wage increases, I don't think anybody is getting less than three per cent and they're raising the CPP benefit 0.4 so that's pretty meagre," he told the Gazette.

Last week, both the Alberta Federation of Labour and the Alberta Union of Provincial Employees condemned Morton for his stance on CPP expansion.

"I wish they would get on with it. There are enough people that are in need. When you look at our property taxes going up 2.79 per cent and those that are just living on CPP benefits and OAS (Old Age Security), it's a struggle," Tansey said.

"It is to the benefit to the people coming behind us too."

St. Albert Gazette, Sat Dec 25 2010
Byline: Lauren Den Hartog

Federal and provincial finance ministers had different views on how to ensure Canadians have enough money for retirement but managed to agree on allowing more private involvement.

"We are all concerned about the economic recovery. We want to make sure the jobs continue to grow in Canada and so there is concern about not putting more burdens on employers right now," said Finance Minister Jim Flaherty Monday afternoon.

Flaherty was in Kananaskis Country meeting with his provincial counterparts on the economy and the future of the Canada Pension Plan.

The minister got everyone to agree on his plan for more private involvement, an idea that was initially turned down by many of his provincial counterparts. One of his only allies at the start was Alberta Finance Minister Ted Morton.

Many of the ministers wanted to look at expanding the Canada Pension Plan but reforms were put on hold.

Instead they have agreed to a framework agreement to allow private sector funds called Pooled Registered Pension Plans, or PRPPs.

Under the agreement, provinces will decide whether business owners must make contributions.

Flaherty says the plan will make pensions available to any type of employee and self-employed Canadians.

He adds the economy isn't strong enough yet to force employers to make higher Canada Pension Plan contributions.

Morton says he likes the private plan proposal. He says it doesn't make sense to hike Canada Pension Plan contributions.

"Certainly amongst a number of us, there was real concern that it would have a negative impact on job creation. Now's not the time to do that," he said.

But labour groups, who want employers to double Canada Pension Plan payments, are disappointed reforms have been put off.

"My big fear is that reform delayed may become reform denied," said Gil McGowan, president of the Alberta Federation of Labour.

The ministers will meet again in June to work out the details of the PRPP system. They will also discuss beefing up the Canada Pension Plan, something that will depend greatly on what direction the economy is heading in half a year.

Flaherty also urged the provinces to get a handle on the growing public debt and eliminate deficits by 2015.

ctvcalgary.ca, Tues Dec 21 2011

As Canada's finance ministers meet today in Kananaskis Country to wrestle with a thorny national pension debate, Alberta Finance Minister Ted Morton will also be pushing for Ottawa and the other provinces to drop investment taxes he says have unfairly been levied on Albertans.

In a number of recent letters, Morton has asked federal Finance Minister Jim Flaherty to suspend both the GST and other provinces' harmonized sales tax (HST) on investment management services.

Since the HST came into effect for financial services in both Ontario and British Columbia last July, he said Albertans -- who have no HST or provincial sales tax -- are at times being forced to pay another province's taxes as they save for retirement.

"Taxes being levied in Ontario are being collected from Albertans," Morton said. "We will not accept Albertans having to pay provincial sales tax ... when they're purchasing services here in Alberta."

In letters, Flaherty has told Morton that residents of Alberta -- or Canadians from other non-HST provinces -- are not included when determining the amount of HST charged on a mutual fund, and "investors in non-harmonized provinces are not unduly affected."

However, Morton said in many cases mutual funds take a "blended" approach, flowing their HST costs out to all investors in the pool equally.

At times, Albertans and other non-HST provinces are lumped in with HST-province investors, particularly Ontario where most of Canada's investment management services companies are headquartered.

He said examining the situation for Albertans made him realize it's not a wise course to charge any consumptive tax on services meant to spur Canadians to save more. It's contrary, he said, to the whole push to boost the retirement income of Canadians.

"Why the heck are we turning around and then levying a tax on financial services which Canadians use to build savings?" Morton said.

It's unclear what support the Alberta minister will receive among his counterparts and Flaherty today -- he acknowledges it's a non-issue for those provinces that have an HST.

However, his plan will likely garner broad support in the financial services industry.

Patrick Farmer of EdgePoint Wealth Management Inc. said his company has already established specific no-HST series funds for people in non-HST provinces, including Alberta, Saskatchewan, Manitoba, Quebec and Prince Edward Island. He said it makes the cost of investing significantly less in those provinces.

Farmer said Morton's plan to cut the taxes is a good idea.

"At a time like this, when investors over 2008 had a very difficult year, and many of them are closer to retirement, the last thing you want is to be taxing savings," he said.

While Morton intends to bring the HST/GST debate to the table, today's meeting in K-Country will likely be dominated by discussions over Flaherty's surprise announcement last week to move to establish a new private-sector pension system. Flaherty also quietly dropped his earlier strategy in addressing what many believe is a looming retirement-income crisis for Canadians, which was to expand the Canada Pension Plan.

The move toward defined contribution Pooled Registered Pension Plans (PRPPs) has outraged unions and other public sector advocates.

On Sunday, the Alberta Federation of Labour held a protest outside the Delta Calgary Airport hotel as the finance ministers headed to Kananaskis for the federal-provincial summit. Dressed as Santa, president Gil McGowan and a couple dozen others urged the ministers to reject the "lump of coal" plans for the private pension plans.

But the plan has been welcomed by financial and investment institutions, as well as Alberta, which has long been pushing for a private, targeted solution for the self-employed and middle-income earners without pensions.

"We think again that any increase in the CPP is unnecessary," Morton said. "Anything you add to the CPP in terms of benefits obviously entails increasing payments. And not just employee payments, but employer payments."

Morton argues that companies, who can choose whether they offer PRPPs or not, will choose to participate to retain employees.

"If employees have a choice between working for companies that have some type of registered pension plan and ones that don't, other things being equal, most of them would take the registered pension plan."

But the debate hasn't died down.

Today's meeting is now set for a showdown between Alberta and other provincial ministers.

On Sunday, six provinces issued a joint statement calling for Flaherty to keep a modest CPP enhancement on the table as part of the package of reforms.

"The provinces expressed concern at recent statements by the federal government suggesting that a modest CPP enhancement was no longer being considered," said the news release from Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, British Columbia and Ontario.

"The provinces have heard strong public support for such an enhancement as an integral part of the retirement income solution. Progress on CPP should not be deferred."

The statement from the provincial ministers said any changes to CPP should be affordable for both employees and employers, and there should be further innovations to provide more Canadians with access to low-cost pensions.

"A harmonized, pan-Canadian framework should be developed, focusing on simplicity and plan member protection," it said.

Ontario Finance Minister Dwight Duncan has said he approves of Ottawa's private plan, but is worried it will come at the expense of a "modest" expansion of CPP to ensure financial stability for Canadians in retirement.

Simon Fraser University professor Jon Kesselman, who focuses on public policy and finance, said the new federal plan ignores the fact that many businesses have already been eliminating or downsizing their company-sponsored pension plans.

"If it's a competitive advantage, why aren't they (companies) doing it now?" Kesselman said. "It puts it all back on the worker."

Kesselman said even though the PRPPs will be available to individuals on their own, most people don't know how much they need to save for retirement, don't have the investment skills, and using conventional approaches, find there's a big drag on returns due to Canada's high investment management fees.

"The returns for the individual investor are much less than the returns for the market as a whole, I presume meaning that it's the institutional investors and the wealthy individuals who do better than average," Kesselman said.

On the other hand, the CPP has lower operating costs, skilled managers and can invest anywhere in the world, he said.

In his letter to provincial ministers, Flaherty noted that today's meeting will also address provincial progress on accommodating the needs of potential Registered Disability Savings Plan (RDSP) beneficiaries with intellectual disabilities who lack contractual competence, and are prevented from opening a plan because they don't have a legal guardian.

Calgary Herald, Mon Dec 20 2010
Byline: Kelly Cryderman

Safety officers will target commercial construction sites in Alberta for inspection in the upcoming year after a safety blitz found a number of contractors were in violation of provincial legislation.

"To say I'm disappointed with these results is an understatement," said Thomas Lukaszuk, Minister of Employment and Immigration, who is responsible for Occupational Health and Safety.

"I expect better of industry in Alberta, and I know industry leaders, employers and workers expect better of themselves."

The Alberta Ministry of Employment released a report on Dec. 14 that states provincial safety inspectors issued a total of 214 orders to employers involved in commercial construction between Oct. 8 and Nov. 22.

A total of 298 initial and follow-up inspections were conducted at 73 construction sites of 146 employers across the province.

Lukaszuk was upset by the number of safety infractions uncovered.

However, some argue the report isn't clear in terms of what the numbers mean.

"The report does not identify a lot of specifics because we are not sure of the location of sites or what the particular infractions were," said Brian Freemark, general manager of Lee's Sheet Metal.

The numbers aren't telling the whole story.

"Because this is the first time we have done a focused inspection in this manner, these numbers can be considered as a baseline, not a good one, but one that can be used to measure whether or not things are getting better or worse," said Barrie Harrison, spokesperson for Alberta Occupational Health & Safety (OH&S).

For this reason, he said the initial inspections are a first tool to provide that baseline.

"Even though there are no previous statistics to refer to, in order to do compare and contrast analyses, the key is that what they are getting from the spot checks is unacceptable," said Ron Harry, executive director of the Alberta Building Trades.

Fall hazards accounted for 57 (27 per cent) of the orders issued, while 17 orders (8 per cent) were issued for problems related to the securing of equipment and materials.

There were 49 orders (23 per cent) issued relating to safeguards for building shafts, covering of openings and guardrails. Scaffolds and temporary work platforms accounted for 39 (18 per cent) of the orders issued.

Working at height as well as the securing of materials and equipment continue to be safety problems in the sector.

The areas of scaffold design, tagging requirements, scaffold planks, bracket scaffolds and outrigger scaffolds are areas requiring OH&S intervention.

"The violations uncovered in these audits are obviously just the tip of the iceberg and they demonstrate why Alberta continues to be the most dangerous place in Canada to be a worker," said Gil McGowan, president of the Alberta Federation of Labour.

"Sadly, the results of the audit are no big surprise to those of us who have been calling for a crackdown on safety violations in construction. What is a surprise is that the government isn't pledging to provide any more resources to deal with what is obviously a very big and very pervasive problem."

No new inspectors were hired by Alberta OH&S and ten inspectors out of a total of 94 were dedicated to the campaign.

McGowan said Alberta needs to spend more money to enforce safety because the province has more people working in construction and other dangerous industries than other provinces.

"The recession gave us a short reprieve, but if simple and common-sense changes - like hiring more inspectors - aren't made today, Alberta will, once again, regain its title as the province with the highest number of workplace fatalities in Canada," he said.

The Ministry of Employment and Immigration reported that there were 110 workplace incident fatalities in 2009. The construction sector had the largest share of these fatalities with 34, or 31 per cent of all fatalities.

Inspectors don't have the power to issue fines for infractions, but Lukaszuk is signaling he wants to start ticketing people who break laws designed to protect workers.

Given the results, follow-up inspections will be conducted in the 2011-12 fiscal year. The inspections are being expanded to include: forklifts and mobile equipment; young workers and residential construction.

Journal of Commerce, Mon Dec 20 2010
Byline: Richard Gilbert

Finance ministers from across Canada converged in Kananaskis Country Sunday to meet with their federal counterpart and discuss the economy as well as find a new way for Canadians to save for their future.

However, one idea that has come up -- expanding the Canadian Pension Plan -- has already gained both supporters and critics.

The government should expand the Canadian Pension Plan, as the most reliable way for Canadians to count on an income in their retirement years, says the Alberta Federation of Labour.

"What we've seen over and over again, especially since the recession started, is that the private system of saving simply isn't working and the one pillar, the Canadian Pension Plan, is the only pillar that is strong enough," said AFL president Gil McGowan.

However, Alberta Finance Minister Ted Morton sees things differently and says he's opposed to raising the rates Canadians pay into the Canadian Pension Plan.

He said he would rather see people put more of their own money aside.

The federal government appears to agree, favouring private pension plans to an expanded Canadian Pension Plan, which is good news for Morton.

"Any changes to the CPP are under federal jurisdiction so it helps to have the federal government as an ally," Morton said.

Morton will need allies as the nation's finance ministers gather in Kananaskis this week to discuss the Canadian pension Plan.

Most of them like the idea of expanding it.

"People see it as the option that's safe, it's administered in a very financially sound way and when people have lost a lot of income with other investments and they're looking for a secure place, they feel Canada pension is the best place to make those investments," said Manitoba Finance Minister Rosann Wowchuk,

The future of the Canadian Pension Plan is just one of the items on the agenda for finance ministers on Monday but has already become the most controversial item.

ctvcalgary.ca, Mon Dec 20 2010

Kananaskis - Alberta Federation of Labour Gil McGowan says the federal-provincial finance ministers' decision to put CPP expansion on ice misses an historic opportunity for retirement security for millions of working Canadians.

"Reform delayed is likely to be reform denied," says McGowan.

"It is clear what happened here: the federal government, along with a tiny minority of provinces, bowed to the pressure exerted by the financial services industry and succeeded in delaying improvements to the CPP," says McGowan. "Alberta Finance Minister Ted Morton has called this a good weekend for Alberta. I would say it's more appropriate to call it a great weekend for Canada's big banks," says McGowan.

Speaking from Kananaskis, McGowan notes there was a strong consensus from at least 6 provinces to move ahead with expanding CPP.

"The good news is there remains a strong appetite - from coast to coast to coast - for pension reform, and most provinces are unequivocal in their support of improving CPP," says McGowan, crediting provinces like Ontario, Manitoba, and Nova Scotia for exercising leadership in keeping CPP improvements on the table.

"It is crucial that 'further study' doesn't turn into another convenient excuse to do nothing," adds McGowan.

"We have been down this road before. In 1979, Canadian finance ministers began a CPP expansion process. It was quickly scuttled by the financial sector, which exerted enormous pressure on Alberta and Ontario's Conservative governments of the day," says McGowan.

"1979 was a cautionary tale for how vested interests can easily deny millions of Canadians a secure future via the most stable, predictable, and secure vehicle we have - the CPP," says McGowan.

"Canadians need to keep up the pressure on their provincial and federal politicians to make sure history does not repeat itself," says McGowan.

The President of the AFL adds that the agreement to move forward on a so-called "Pooled Retirement Pension Plan" - administered by the big banks - is at best a half-measure.

"At worst, this private-sector retirement savings scheme is a distraction from real reform.  The plan is nothing more than glorified RRSPs, which have failed the majority of Canadians for decades. It will not solve the real problem: adequate replacement of pre-retirement income, based on a low-cost, low-risk plan that benefits modest income earners," says McGowan.

The Alberta Federation of Labour and the Canadian Labour Congress have an ongoing campaign for improvements to the CPP, with a modest increase to premiums and a doubling of CPP benefits over time. More details are at www.realpensionreform.org

-30-

Media Contact:

Gil McGowan, President, Alberta Federation of Labour @ cell 780-218-9888 or office 780-483-3021

Provincial finance ministers were met by a group of festive protesters at the Calgary International Airport Sunday, calling for the Canadian Pension Plan to be expanded.

Dressed as Santa Claus, Alberta Federation of Labour president Gil McGowan led the two-dozen strong protest by handing out presents to finance ministers in favour of expanding CPP contributions, but had lumps of coal for its opponents, including Alberta's Ted Morton and federal Finance Minister Jim Flaherty, who failed to make a scheduled press availability.

Morton was followed out of the Delta Hotel at the airport by the protest group, who sang the modified Christmas carol Let It Grow, while McGowan presented his gift of coal.

"Any changes to CPP would fall under federal jurisdiction," said Morton, who managed to maintain a smile. "So it would help to have them as an ally."

The finance chiefs were in Calgary ahead of a Monday meeting in Kananaskis.

With nearly half of Canadian seniors without private savings, changes are desperately needed to CPP, said McGowan.

The AFL is calling for a 60% increase to premiums, which he said will double the fund in 40 years.

"This is one of the biggest issues currently facing Canadians because if nothing is done, we face a future of increasing poverty for seniors," he said. "The maximum annual payout you can get from CPP is $11,000 and the average is about $6,000 and that's not enough to live on." Manitoba's Rosann Wowchuk, who supports the expansion of the current system, landed on the union's "nice list."

"Although we are coming out of the recession it is still a fragile economy and we have to look at ways we can move forward and one of the most important issues on the agenda is dealing with pension reform," said Wowchuk.

Instead of expanding CPP, Flaherty has tabled his own plan in a letter to his provincial counterparts last week, which would see pooled registered pension plans administered by a third party - likely a bank. Flaherty was scheduled to speak to reporters Sunday afternoon in Calgary but that was cancelled due to what spokesman Chisholm Pothier described as "logistics." Flaherty said later in Kananaskis that he agreed work should continue on amending the CPP.

"This is not the time to proceed with implementation," he said. He said the triennial review is due in 2012.

Calgary Sun, Sun Dec 19 2010
Byline: Dave Dormer

This Sunday and Monday, Alberta will be centre stage at what has the potential to become a key moment in Canadian history.

Finance ministers from across the country will gather in Kananaskis to discuss whether to expand the Canada Pension Plan (CPP) to address a looming crisis in retirement income.

If CPP is expanded to provide a more stable foundation for retirement security in Canada, it would represent one of our country's most important social policy changes since the introduction of medicare.

It would also be a timely Christmas present for the millions of Canadians who worry about their retirement savings and who have been badly burned by RRSPs and mutual funds.

The big question is this: will the nine provincial finance ministers who support CPP expansion find the courage to make a deal in the public's best interest?

Or will they give in to pressure from Alberta Finance Minister Ted Morton, who, for ideological reasons, has always opposed CPP expansion, and his new ally in opposition, federal Finance Minister Jim Flaherty, who recently withdrew his support for CPP expansion as a result of pressure from Prime Minister Stephen Harper and the private investment industry?

Morton has been all over the media lately trying to downplay the need for change.

He has, for example, been trying to draw attention away from facts like these:

• That even here in wealthy Alberta, half of current seniors have no individual savings at all (that's right . . . zero)
• That only 35 per cent of working Albertans are covered by a workplace pension (and the number is falling each year)
• That only 38 per cent of Albertans made RRSP contributions in 2008 and the average contribution was just $3,200 (hardly enough to build a retirement nest egg).
• That the average fees charged by mutual funds are five times higher than the fees charged by CPP and can eat up between 40 and 60 per cent of an individual's investment earnings (no, that's not a typo)
• That CPP is financially sound and fully portable between jobs . . . but only provides maximum annual benefits of about $11,000 per year (with the average annual payout being only $6,000)

In addition to ignoring the scope of the problem, Morton has also been sowing confusion about what CPP expansion really means.

In particular, he has been deliberately leaving the impression that CPP is a "social program" financed by taxpayers - the implication being that an expanded CPP would be a reward to those who didn't have the foresight to save for themselves, paid for by those who did.

Nothing could be further from the truth. CPP is not a tax-funded program. It is financed by matched contributions from workers and employers.

An expanded CPP would simply mean that workers and employers would be required to put a little more into the system today so that Canadians could get bigger retirement benefits in the future.

In other words, an expanded CPP would provide better opportunities for Canadians to save for themselves (which, by the way, would have the effect of making them less reliant on tax-funded programs).

So, why are Morton and Flaherty opposed to helping Canadians save for themselves?

Sadly, the answer to that question can be boiled down to ideology and self-interest.

Ideologically, Morton is a right-winger who prefers policy solutions that help businessmen put profits in their pockets.

Flaherty is not nearly as rabidly ideological as Morton, but the federal Conservatives are close to Canada's banking and financial industry which has been waging an aggressive lobbying campaign against CPP expansion.

The industry fears that if Canadians are able to invest more of their money through CPP then they'll put less money into things like private mutual funds.

And reduced investment in mutual funds would mean fewer bonuses and fewer and BMWs for bankers and mutual fund managers (heaven forbid!)

The fact that Flaherty has allowed himself to be swayed by the ideology of Morton and the self-interest of the banking community is more than a disappointment - it's a betrayal.

Instead of supporting CPP expansion, Flaherty is now peddling a proposal for "pooled funds," which sounds suspiciously like a plan recently floated by the banking industry. These funds would (surprise, surprise) be run by banks, insurance companies and the mutual fund industry (for a reasonable fee, of course).

Unlike CPP, these new funds would not provide a guaranteed benefit, employers would not be required to make matching contributions (meaning most of them wouldn't) and they would be run by the same private players who have been underperforming and overcharging Canadians for decades.

In other words, these funds would be nothing more than glorified RRSPs - and we've seen how well that's worked for middle-class Canadians.

So, as our finance ministers head into their pivotal meeting in Kananskis, the battle lines have been clearly drawn.

On one side we have Morton, Harper and the banks. On the other side we have nine provinces, dozens of policy experts who endorse CPP expansion and the overwhelming weight of public opinion.

Clearly, the "noble nine" will have to fight hard to put the idea of CPP expansion back on the table as the preferred option.

If they don't, we could end up repeating the scenario that unfolded in 1979 when similar proposals for CPP expansion were scuttled by united opposition from conservative governments in Alberta and Ontario, supported behind the scenes by the big banks and mutual fund companies.

Will Canada's finance ministers stand up and do the right thing this weekend? For the sake of future generations of Canadians, let's hope they decide to make history.

Calgary Herald, Sun Dec 19 2010
Byline: Gil McGowan

CALGARY -- Provincial finance ministers were met by a group of festive protesters at the Calgary International Airport Sunday, calling for the Canadian Pension Plan to be expanded.

Dressed as Santa Claus, Alberta Federation of Labour president Gil McGowan led the two-dozen strong protest by handing out presents to finance ministers in favour of expanding CPP contributions but had lumps of coal for its opponents, including Alberta's Ted Morton and federal Finance Minister Jim Flaherty who failed to make a scheduled press availability.

Morton was followed by the protest group out of the Delta Hotel at the airport, who sang the modified Christmas carol "Let It Grow," while McGowan presented his gift of coal.

"Any changes to CPP would fall under federal jurisdiction," said Morton, who managed to maintain a smile.

"So it would help to have them as an ally."

The finance chiefs are in Calgary ahead of a Monday meeting in Kananaskis.

With nearly half of Canadian seniors without private savings, changes are desperately needed to CPP, said McGowan.

The AFL is calling for a 60% increase to premiums, which he said will double the fund in 40 years.

"This is one of the biggest issues currently facing Canadians because if nothing is done, we face a future of increasing poverty for seniors," he said.

"The maximum annual payout you can get from CPP is $11,000 and the average is about $6,000 and that's not enough to live on."

Manitoba's Rosann Wowchuk, who supports the expansion of the current system, landed on the union's "nice list."

"Although we are coming out of the recession it is still a fragile economy and we have to look at ways we can move forward and one of the most important issues on the agenda is dealing with pension reform," said Wowchuk."

"I'm hopeful with the number of provinces supporting modest changes to Canada pension, moving forward I'm hoping we can make some progress."

Instead of expanding CPP, Flaherty has tabled his own plan in a letter to his provincial counterparts last week, which would see pooled registered pension plans administered by a third party -- likely a bank.

Flaherty was scheduled to speak to reporters Sunday afternoon in Calgary but that was cancelled due to what spokesman Chisholm Pothier described as "logistics."

Toronto Sun, Sun Dec 19 2010
Byline: Dave Dormer

On Sunday and Monday, Alberta will be centre stage at what has the potential to become a key moment in Canadian history.

Finance ministers from across the country will gather in Kananaskis to discuss whether or not to expand the Canada Pension Plan (CPP) to address a looming crisis in retirement income.

If CPP is expanded to provide a more stable foundation for retirement security in Canada, it would represent one of our country's most important social policy changes since the introduction of Medicare.

It would also be a timely Christmas present for the millions of Canadians who worry about their retirement savings and who have been burned by RRSPs and mutual funds.

The big question is this: will the nine provincial finance ministers who support CPP expansion find the courage to make a deal in the public's best interest?

Or will they give in to pressure from Alberta Finance Minister Ted Morton -- who, for ideological reasons, has always opposed CPP expansion -- and his new ally in opposition, federal Finance Minister Jim Flaherty, who recently withdrew his support for CPP expansion as a result of pressure from Prime Minister Stephen Harper and the private investment industry?

Morton has been all over the media lately trying to downplay the need for change.

He has, for example, been trying to draw attention away from facts like these:

- -That even here in wealthy Alberta, half of current seniors have no individual savings at all (that's right ... zero),

- -That only 35 per cent of working Albertans are covered by a workplace pension (and the number is falling each year),

- -That only 38 per cent of Albertans made RRSP contribu-tions in 2008 and the average contribution was just $3,200 (hardly enough to build a retirement nest egg),

- -That the average fees charged by mutual funds are five times higher than the fees charged by CPP and can eat up between 40 and 60 per cent of an individual's investment earnings (no, that's not a typo), and

- -That CPP is financially sound and fully portable between jobs ... but only provides maximum annual benefits of about $11,000 per year (with the average annual payout being only $6,000),

In addition to ignoring the scope of the problem, Morton has also been sowing confusion about what CPP expansion really means.

In particular, he has been deliberately leaving the impression that CPP is a "social program" financed by taxpayers -- the implication being that an expanded CPP would be a reward to those who didn't have the foresight to save for themselves, paid for by those who did.

Nothing could be further from the truth. CPP is not a tax-funded program. It is financed by matched contributions from workers and employers.

An expanded CPP would simply mean that workers and employers would be required to put a little more into the system today so that the employees in question could get bigger retirement benefits in the future.

Helping Canadians save for themselves

In other words, an expanded CPP would provide better opportunities for Canadians to save for themselves (which, by the way, would have the effect of making them less reliant on tax-funded programs).

So, why are Ted Morton and, more recently, Jim Flaherty opposed to helping Canadians save for themselves?

Sadly, the answer to that question can be boiled down to ideology and self-interest.

Ideologically, Morton is a right-winger who prefers policy solutions that help businessmen put profits in their pockets.

Flaherty is not nearly as ideological -- but the federal Conservatives are close to Canada's banking and financial industry which has been waging an aggressive lobbying campaign against CPP expansion.

The industry fears that if Canadians are able to invest more of their money through CPP then they'll put less money into things like private mutual funds.

And reduced investment in mutual funds would mean fewer bonuses and fewer and BMWs for bankers and mutual fund managers (heaven forbid!)

The fact that Flaherty has allowed himself to be swayed by Morton and the banking community is more than a disappointment -- it's a betrayal.

Instead of supporting CPP expansion, Flaherty is now peddling a proposal for "pooled funds" which sounds suspiciously like a plan recently floated by the banking industry. These funds would (surprise, surprise) by run by banks, insurance companies and the mutual fund industry (for a reasonable fee, of course).

Unlike CPP, these new funds would not provide a guaranteed benefit, and employers would not be required to make matching contributions (meaning most of them wouldn't).

In other words, these funds would be nothing more than glorified RRSPs -- and we've seen how well that's worked for middle-class Canadians.

'Noble nine' face tough fight

So, as our finance ministers head into their pivotal meeting in Kananaskis, the battle lines have been clearly drawn.

On one side we have Morton, Harper and the banks. On the other side we have nine provinces, dozens of policy experts who endorse CPP expansion and the overwhelming weight of public opinion.

Clearly, the "noble nine" will have to fight hard to put the idea of CPP expansion back on the table as the preferred option.

If they don't, we could end up repeating the scenario that unfolded in 1979 when similar proposals for CPP expansion were scuttled by united opposition from conservative governments in Alberta and Ontario -- supported behind the scenes by the big banks and mutual-fund companies.

Will Canada's finance ministers stand up and do the right thing this weekend? For the sake of future generations of Canadians, let's hope they decide to make history.

Edmonton Journal, Sat Dec 18 2010
Byline: Gil McGowan