Supermajority Needed to Exit CPP

Summary#

This bill changes the Canada Pension Plan (CPP) rules so a province cannot adopt its own “comprehensive pension plan” (a provincial plan that replaces CPP) unless many other CPP provinces agree. It adds a consent test based on both the number of provinces and their population. It does not change CPP benefits or contribution rates. It takes effect 180 days after it becomes law (Bill s. 2; Bill Preamble; Bill s. 1 adding CPP s.3(2.1)).

• Requires consent from at least two thirds of provinces that are still in CPP, representing at least two thirds of their combined population, before regulations that allow a province to adopt its own plan can be made (Bill s. 1; CPP s.3(2.1)).
• Consent must come from each province’s lieutenant governor in council (the provincial cabinet) (Bill s. 1; CPP s.3(2.1)).
• Provinces that already run their own comprehensive plan are excluded from the consent count (Bill s. 1; CPP s.3(2.1)).
• No change to CPP benefit formulas, eligibility, or contribution rates (Bill text).
• Comes into force on the 180th day after Royal Assent (Bill s. 2).

What it means for you#

• Households and workers in CPP provinces:

  • No immediate changes to your CPP contributions or benefits. The bill only adds a consent step if a province seeks to leave CPP (Bill s. 1).
  • If your province considers creating its own plan, that step would now require approval from a super‑majority of other CPP provinces by count and population (Bill s. 1; CPP s.3(2.1)).

• Workers and retirees in provinces that already have their own comprehensive plan:

  • No change. Those provinces are excluded from the consent calculation, and current benefits are unaffected (Bill s. 1).

• Businesses and payroll administrators:

  • No immediate payroll changes. CPP withholding rules remain the same unless a province later exits CPP, which would now face the added consent requirement (Bill s. 1).

• Provincial governments (that participate in CPP):

  • A province that wants to adopt its own comprehensive plan would first need consent from at least two thirds of other CPP provinces representing at least two thirds of their population, provided by their cabinets (Bill s. 1; CPP s.3(2.1)).
  • Provinces that already operate a comprehensive plan are not part of the consent pool (Bill s. 1).

• Federal government:

  • The Governor in Council may only make the relevant regulations if the consent thresholds are met (Bill s. 1; CPP s.3(2.1)).

• Timing:

  • The new consent rules apply starting 180 days after Royal Assent (Bill s. 2).

Expenses#

Estimated net cost: Data unavailable.

• The bill includes no direct spending, taxes, or fees (Bill text).
• Any administrative costs to document provincial consents or adjust regulation-making are not quantified. Data unavailable.

Proponents' View#

• Protects CPP contributors from disruptions that could arise if a province withdraws, aligning with the bill’s stated goal to ensure Canadians keep the pension benefits they worked for (Preamble).
• Requires broad agreement—two thirds of CPP provinces and two thirds of their population—before a province can adopt its own plan, ensuring major changes have wide support (Bill s. 1; CPP s.3(2.1)).
• Limits unilateral action that could affect contributors in other provinces, supporting CPP stability (Preamble; Bill s. 1).
• Creates a clear consent threshold, which may reduce uncertainty around when provincial withdrawal can proceed (Bill s. 1; CPP s.3(2.1)). Assumption: clarity depends on how governments apply the process.

Opponents' View#

• Reduces provincial autonomy by giving other provinces an effective veto over a province’s decision to create its own plan (Bill s. 1; CPP s.3(2.1)).
• Sets a high barrier that could make exit impractical for many provinces, regardless of local preference (Bill s. 1).
• Legal risk: May face court challenges over the division of powers and the CPP framework for provincial plans, creating uncertainty until resolved. Assumption: outcome depends on constitutional interpretation.
• Lacks process details (timelines, dispute resolution) for obtaining and recording consent, which could lead to delays or political bargaining (Bill s. 1; CPP s.3(2.1)).