The federal government says the new program will benefit Canadians without an employer-sponsored plan, including the self-employed.
In a statement issued on Thursday, Morton said Alberta has been promoting and working on this type of private-sector pension innovation with B.C. for several years and the only stumbling block had been a lack of interest in Ottawa.
"This is the type of targeted solution Alberta has been advocating to address concerns that many middle-income Canadians are not saving enough for their retirement, and we are pleased the federal government is now on board," he said.
According to Morton, pooled pension plans provide a simple, low-cost, effective way of improving pension coverage for employees of small and medium business and the self-employed, many of whom cannot afford pension plans.
"Allowing private-sector providers to offer and manage pooled pension plans on behalf of multiple employers will significantly reduce costs to businesses as well as provide the financial expertise to better manage the investments and the investment risks," said Morton.
He said federal support is needed in order for the initiative to move forward because it will require changing current income tax laws and provincial pension standards.
With pooled pensions, a third party would manage the administrative aspects of the plan while employers would be responsible for determining employer and employee contribution levels, collecting and remitting contributions and keeping the administrator up to date regarding new members and employee termination.
The plan replaces a proposal put forward by Ontario and the federal government earlier this year to expand the Canada Pension Plan (CPP), something that had the support of every finance minister in Canada except Morton.
In an open letter to Canada's finance ministers last week, the Alberta Federation of Labour (AFL), a strong supporter of CPP expansion pointed to a recent Environics poll that found 66 per cent of all Albertans support an increase in CPP benefits while only 19 per cent are opposed.
Morton argued expanding the CPP may benefit those who are not saving enough for retirement but would also provide additional and unnecessary benefits to those who already have adequate income provisions.
"It would also hurt low-income workers, who would be required to make additional contributions during their working lives," Morton said in a June 11 press release.
The solution, he said then, was to find ways to encourage Canadians to save for their retirement over the course of their working careers, including pension innovation and supplementary pension plans.
"We should be looking for the right combination of private sector delivery with public oversight and monitoring," he said.
Changes welcomed at home
St. Albert resident Brian Endin, 66, said he is grateful for the government's about-turn on CPP expansion, a proposal he had many concerns with.
"I'm very grateful for it but the point is, an awful lot of finance ministers across this country already committed to expanding CPP," he told the Gazette on Friday.
Endin said, had the government expanded the CPP, it would have had a significant impact on many people, including those who prefer to invest, even temporarily, in building a business or in other forms of wealth building and those who want to cease pension contribution to save for a down payment on a home.
"I don't see any harm," Endin said of proposed pooled plan.
"The concerns that I had for the expanding CPP, I can't think of any of my concerns that apply to the new plan, number one because it's voluntary which means that if a person needed to stop submitting to the plan, they could ... I like that flexibility part of it," he said.
"The government needs to have oversight over pension plans so that people don't get fleeced because you've seen how absolutely and abjectly crooked the financiers and the financial market are around the world," he added.
"This would give the fed government an opportunity to have oversight which would protect everybody."
St. Albert Gazette, Sat Dec 18 2010
Byline: Lauren Den Hartog