TORONTO, June 22, 2016 /CNW/ - Fred Vettese, Chief Actuary of Morneau Shepell (TSX: MSI), comments on the agreement announced on Monday by the country's Finance Ministers to expand the Canada Pension Plan. "Overall, the proposed expansion should be considered good news for Canadians in general and the middle class in particular," said Vettese.
Morneau Shepell Partner and Practice Leader for Ontario, Nigel Branker, added, "While many businesses will not be happy with the increase in payroll costs, the increase is modest compared to the other serious proposals for CPP expansion that have been considered in recent years."
"Existing workplace pension plans will need to be amended to integrate the CPP enhancement," explained Vettese. "This will require negotiations with unions in collectively bargained settings. The lengthy phase-in period should provide enough time for such changes to be considered and implemented."
Currently, employee CPP contributions receive a tax credit based on the lowest income tax rate. According to the agreement, the enhanced portion of employee CPP contributions will be tax deductible. This tax treatment will be much more favourable to higher income individuals than a tax credit. Employer CPP contributions will remain fully deductible.
"The current round of pension reform has been going on now for nearly a decade and the uncertainty it has created hasn't been conducive to pension plan innovation," said Vettese. "It's hoped that the agreement on CPP expansion will bring some closure."
About Morneau Shepell Inc.
Morneau Shepell is the only human resources consulting and technology company that takes an integrative approach to employee assistance, health, benefits and retirement needs. The Company is the leading provider of employee and family assistance programs, as well as the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity and improve their competitive position. Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With almost 4,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.
SOURCE Morneau Shepell - Corporate