Enhanced CPP option on the rocks

Federal Finance Minister Jim Flaherty appears set to discard the option of enhancing the Canada Pension Plan, heading into the meeting with his provincial counterparts in Kananaskis, Alberta.

Last week Flaherty proposed a private sector solution to Canada’s future retirement funding crisis, which would allow workers without a pension plan to contribute to a pooled offering supplied by financial institutions.

Six provinces – British Columbia, Manitoba, Ontario, Prince Edward Island, New Brunswick and Nova Scotia – support the enhanced CPP option, saying that it would be easier and more affordable for most Canadians.

So far, only Alberta and Quebec are on board with the Flaherty’s plan.

Retirement funding programs are not the only subject on the table in Kananaskis. Alberta Finance Minister Ted Morton will continue to press the federal government to eliminate the GST on investment management services, at the same time killing the HST charged on these services.

In a series of letters to the Flaherty, Morton points out that mutual fund companies domiciled in Ontario, where the HST was introduced this year, are blending the cost of the tax, forcing Albertans to pay the Ontario tax.

At a time when politicians are focused on boosting Canadians’ savings rate, Morton says it makes no sense to turn around and tax the investment vehicles that facilitate savings.

For more on retirement funding reform, check out BenefitsCanada.com.