TORONTO, Dec. 16 /CNW/ - With the release of a new proposal on pension innovation in advance of the meeting of Finance Ministers in Kananaskis, Alberta, the Canadian Federation of Independent Business (CFIB) is pleased to see ministers moving away from focusing on raising Canada Pension Plan (CPP) benefits and premiums.
"Small businesses will be pleased to learn that finance ministers are concentrating on practical steps to improve retirement income vehicles for employees and employers, rather than approving an increase in mandatory CPP premiums," said CFIB president Catherine Swift. "The framework for Pooled Retirement Pension Plans (PRPPs) has significant potential to improve the mix of retirement savings options for smaller firms and self-employed entrepreneurs."
As increasing the CPP requires the support of two-thirds of the provinces representing two-thirds of the population, it does not appear that there is enough support to move forward with the discussion of a "modest" CPP hike that started in Prince Edward Island. "We are pleased that ministers are recognizing the negative impact that an additional payroll tax increase would have on the economy, employment and wages," noted Swift. CFIB's recent study on the proposal of the Canadian Labour Congress (CLC) to increase CPP found that it would eliminate 1.2 million person years of employment.
CFIB supports the general direction of the proposal for PRPPs but is opposed to any consideration that provinces may make participation by employers mandatory. "Increasing the number and flexibility of retirement savings options for employers is important, but the chief roadblock for small businesses to offer such plans is affordability," Swift added. "Considering tax incentives and removing tax disincentives for retirement savings tools is equally important to help SMEs expand coverage for employees," she noted. CFIB has further recommended that governments remove payroll taxes on employer contributions to Registered Retirement Savings Plans (RRSPs) and work to ensure that public sector pensions are made more affordable for taxpayers.
The Federation is also challenging Canada's financial institutions to examine ways of putting such plans in place as soon as the rules allow. "As finance ministers are looking to enable a new vehicle to facilitate pension arrangements, the ball is now in financial institutions' court to demonstrate that they can fulfill the goal of helping small firms, their employees and the self-employed to save for their retirement in a cost-effective way, with low management fees and administratively simple processes," Swift concluded.
As Canada's largest association of small- and medium-sized businesses, CFIB is Powered by Entrepreneurs™. Established in 1971, CFIB takes direction from more than 107,000 members in every sector nationwide, giving independent business a strong and influential voice at all levels of government and helping to grow the economy.
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