Monthly Archives: July 2016

What the New CPP Agreement Means for You

pensions CPP

The agreement  reached in Vancouver to enhance the CPP last week was historic in nature. Still,  some people will benefit far more than others. Many Ontario workers, for example,  would have been better off with the provincial pension plan that was abandoned by the Ontario Government within days of the signing of the CPP accord.

There is no question that Canada’s finance ministers reached an historic agreement in Vancouver on June 20. There is also no question that the changes in CPP design that the ministers agreed upon represent an eventual increase in CPP benefits for all workers when compared to the current CPP design.

That said, two additional questions need to be asked when assessing the agreement:

1)      To what extent are the workers most in need of a boost in their retirement savings getting the increase in benefits they need to truly retire in dignity and security. In other words, are the CPP changes agreed upon in Vancouver targeted towards those most in need ; and

2)      Are Ontario workers – who comprise almost 40% of the Canadian labour force – better off under the new CPP regime than they would have been under the Ontario Retirement Pension Plan (ORPP) that was scheduled to be fully implemented in 2019 – the first year of a 7-year phase-in of the agreed upon CPP changes that won’t be completed until 2025? This is relevant given that with the signing of the CPP accord, the Ontario Government moved within days to kill its ORPP initiative.

Background to the Vancouver agreement

Before answering these two questions, it is important to provide some context to the discussions that took place in Vancouver on June 20th.

The task for the finance ministers meeting in Vancouver was to see if there was a formula for reform that had a chance of getting 7 provinces containing two-thirds of Canada’s population (the amending formula for the CPP) to buy into. This was always going to be a challenge given that B.C., Saskatchewan and Quebec had been clear in the previous federal-provincial meeting in December, 2015 that they had little appetite for any sort of CPP/QPP enhancement and Manitoba’s brand new Conservative government was almost certain to join this “sceptic” group. Continue reading