While the federal government has ruled out an increase to mandatory Canada Pension Plan (CPP) premiums, Federal Finance Minister Joe Oliver has launched a public consultation into the merits of a voluntary supplement.
In a press release issued last week, Oliver made it clear that the Conservative government was against any kind of mandatory CPP premium increase. The government believes that a payroll tax hike would "be particularly damaging during a time of instability in the global economy", and says that it "would hit small business owners especially hard".
However, the government is prepared to consider the possibility of introducing a voluntary supplement to the CPP and is now seeking comments on the subject. The consultation document raises a number of questions about how voluntary contributions to the CPP would be handled. For example, what would be an appropriate annual contribution limit, and should voluntary contributions be locked in? Should there be a mechanism to allow for transfers between a voluntary supplement to the CPP and private savings vehicles such as RRSPs? Should employers be allowed to make voluntary contributions for their employees?
In addition, the consultation document is seeking views on how voluntarily contributed funds should be managed. Should the voluntary investments be managed by the Canada Pension Plan Investment Board in the same way the handle mandatory contributions paid into the existing CPP fund?
These consultations are open to anybody interested in participating, and the closing date is September 10, 2015. The complete consultation document is available on the Department of Finance web site at www.fin.gc.ca.