The federal government reached an agreement with most of the provinces to revamp the program for the first time in nearly two decades.
“I think we played a constructive role knowing full well that, had we not gone along with it, something would have been imposed upon us that maybe was less palatable,” provincial Finance Minister Kevin Doherty said Tuesday at the legislature.
Saskatchewan had initially opposed any change. It argued that it wasn’t the right time to increase CPP contributions when employers and employees are struggling because of the economy.
But Doherty said the best option was to work on a national plan with a phased-in date starting in 2019.
“I wouldn’t call it an about-face,” he said.
“What we said last December when we met with our colleagues from across the country was that we were prepared to look at options, including the option of doing nothing.”
Doherty said Ontario was on a “much more aggressive timeline” and it came down to working out a compromise to keep Ontario in the national pension plan.
Ontario decided to create its own pension plan only after the previous federal Conservative government refused to consider anything that would increase premiums paid by employers. But Premier Kathleen Wynne said the province always considered an enhanced CPP its preferred option.
The agreement-in-principle, which only Quebec and Manitoba have yet to endorse, would see an increase in monthly premiums phased in starting at $7 a month in 2019 for a worker earning $55,000 a year.
The plan is to be phased in over seven years until 2025 and means people retiring will see their maximum annual benefits increase by about one-third to $17,478.
Doherty said the phased-in approach will give the economy more time to rebound.
Dan Kelly, president of the Canadian Federation of Independent Business, said Saskatchewan’s move is “a dramatic about-face.”
“To see the minister’s signature on this agreement-in-principle is pretty shocking to us, especially given that Saskatchewan was seemingly the most reliable small business ally in the province. That is pretty surprising,” said Kelly.
Finance ministers are putting Canadian wages, hours and jobs in jeopardy and wilfully moving to make an already shaky economy even worse, Kelly suggested.
“Our goal now moves to torpedoing the deal.”
Doherty acknowledges there will be a cost to employers over the long term, but pointed out the money isn’t going into an account for governments to spend on operational programs.
“This is money that’s going into a savings plan for individuals in their early 20s right now who will be saving for retirement for 40 years out. That, we think, is significant.”