Manitoba adds its support to expansion of Canada Pension Plan
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Manitoba on Thursday agreed in principle to the expansion of the CA$278.9 billion ($214.4 billion) Canada Pension Plan, Ottawa.
The province, along with Quebec, had abstained from endorsing the proposal when Canadian provincial ministers and Canada Finance Minister William Morneau met June 21. Ministers from the country's eight other provinces agreed to the expansion.
Manitoba Premier Brian Pallister said in a news release that his government endorsed the expansion after the federal government agreed to conduct more research and analysis “on several proposals made by the province to further modernize” the CPP. Those proposals include indexation of the CPP death benefit and a comprehensive review of CPP survivor and disability benefits.
Manitoba’s approval was not required to enact the expansion. Under Canadian law, a change to the CPP would require approval of seven provinces representing two-thirds of Canada’s population; the approval of eight of the country’s 10 provinces was more than enough to enact the change.
Quebec, which does not participate in the CPP, is expected to make some sort of enhancement to its CA$57 billion ($43.71 billion) Quebec Pension Plan.
The proposal agreed to by the ministers will raise benefits to one-third of pensionable earnings from 25%, increase the maximum annual earnings cap to CA$82,700 ($63,423) by 2025 from the current CA$54,900 ($42,103), and boost employer and employee contributions by up to one percentage point each by 2025. The contribution increase — to as much as 5.95% from the current 4.95% — would be phased in beginning in 2019.
An earlier attempt to reach an agreement to enhance the CPP in late 2013 was unsuccessful, with the Conservative government of former Prime Minister Stephen Harper not supporting any enhancement.
Rick Baert writes for Pensions & Investments, a sister publication of Business Insurance.
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