The Ontario government has released a consultation paper calling for pension reform by, among other things, expanding the Canada Pension Plan and the Quebec Pension Plan (C/QPP). The paper outlines three possible enhancements to the C/QPP:

  • Increase the income replacement rate from 25% of year's maximum pensionable earnings ("YMPE") to 35%;
  • Increase the $47,000 YMPE earnings ceiling by 50% or 100%; and
  • Increase both the income replacement and the YMPE earnings ceiling.  

The paper argues that expanding the C/QPP is justified because the income levels of retirees will not be adequate in the future as fewer employees in the private sector participate in pension plans and employees are not taking advantage of existing contribution room in RRSPs and tax-free savings accounts.