Canada provinces – with the exception of Quebec and Manitoba – reached an agreement in principle on Monday to enhance the Canada Pension Plan, which will lead to Canadians gradually starting to pay more premiums in two and a half years.

Ottawa and the provinces say the “historic” deal will boost Canadians’ retirement security, but not everyone agrees. Here’s a look at what analysts, experts and business leaders are saying about the proposed changes to CPP:

Perrin Beatty, Canadian Chamber of Commerce’s President and CEO

“The timing is certainly a factor. Certainly at a time when we are looking to inject money into the economy, talking about increasing payroll taxes is not a good way to do that. But it goes beyond that. Canadian businesses are straining – particularly small to medium-sized businesses. This is not a way to stimulate the economy. It does just the opposite.

This is an instance in which there is a cure for no known disease.

If there’s a good news story here it’s that we’re not going to get into a crazy quilt of provincial programs. What Ontario was doing [with the Ontario Retirement Pension Plan] was simply stunning. They were hiring up and staffing up a program that didn’t exist, and spending millions of dollars on advertising to promote it.

If there’s good news in the announcement last night, it’s that it could have been worse.”

Dan Kelly, Canadian Federation of Independent Business President

"It is tremendously disappointing to see that finance ministers are putting Canadian wages, hours and jobs in jeopardy and willfully moving to make an already shaky economy even worse… Despite all the talk, it appears that jobs and the economy are not particularly high priorities for the governments that have signed off on this deal.

What's worse, it appears governments aren't even bothering to consult Canadians on the move – even when an Angus Reid poll shows that less than 10 per cent are following the issue.

The only positive to come out of this process is that the ORPP – the CPP's far uglier cousin – won't come to fruition… It's a shame that Ontario spent millions of dollars to effectively bully the smaller provinces to force their pension agenda."

Warren Lovely, National Bank Financial’s Head of Public Sector Research and Strategy

“While it won’t please everyone, Monday’s agreement in principle attempts to find a middle ground. By lifting the income replacement rate and raising the ceiling on eligible earnings, the agreement is meant to head off retirement income adequacy concerns that were deemed most acute in some provinces. At the same time, by limiting the overall enhancement, by gradually phasing-in the changes (over seven years), by changing the tax treatment of marginal contributions and by signaling related tax relief for low-income workers, the intended strengthening of the CPP blunts concerns about low-income earners being forced to scarce income towards saving for their retirement.

CPP contributions will increase, starting in 2019, and the small-business lobby might not be too crazy about incremental ‘payroll taxes’, but again we tend to view the proposed enhancement as a moderate approach. True, it will sacrifice some spending in the medium-term and the additional contributions (yet to be confirmed/communicated) could have a negative impact on job creation. But the benefit is stronger growth/spending in the long-run. You might term this approach ‘paying it forward.’”

Ian Lee, Sprott School of Business at Carleton University professor

“I’m disappointed. I’m very much in the camp, based on evidence and scholarship, that we do not have a pension crisis in Canada.

We have one of the lowest rates of elder poverty on the planet earth. That’s 7.5 per cent of our elders below the poverty line who are in retirement.

I agree with the Quebec finance minister – this calls for a targeted solution.

It’s going to hurt. There’s this implicit assumption by the premiers. I want to just grab them and just bring them into my classroom and sit them down and give them a lecture on basic intro to the economy 101. There’s the implicit assumption that if you suck all this money out – called increases in premiums –it’s going to have a zero impact on the economy. Now nobody believes that. That’s tooth fairy land.”

Brian DePratto, TD Economics economist

“Really, [the CPP deal] is about middle-income Canadians. So if you’re above that current cap of $55,000 up to about the $90,000 mark, this is really targeted at you. This is going to cost you a little more now, but you’ll get much more in terms of the benefits after retirement…

Certainly it is going to be much more costly, we ran the numbers for someone above the cap and they’re going to see a 50 per cent increase in the share of their money that’s being taken away each paycheque – from three per cent to a little over four per cent by the time 2025 rolls around. That’s not pocket change, that’s about $4,000 a year that could have been put aside in TFSAs, RRSPs, other investments themselves…

The issue [for employers and employees] isn’t so much on the hiring side. What tends to happen is a lot of this will get pushed into wages. So you’ll see wages not grow as fast as they would have, as employers tend to push these costs back onto employees.” 

Bill Robson, C.D. Howe Institute President and CEO

“If you’re a low income earner, the last thing you need is to be paying higher contributions now on income you cannot afford to lose, in order to get these benefits in retirement that will probably all get clawed back from you by various types of income tests … It makes no sense.

There’s no reason – and maybe they’ll still change their minds, I hope they do – why they couldn’t have said okay if there’s a saving gap, it’s more people who are little above [the CPP range].  People who actually could afford to save, but don’t have the discipline or whatever. Cover that higher income range but leave the lower income earners alone. They’re actually better off with the current system than with this new one.”