Conceptual Apparatus

Historical institutionalism provides a rich theoretical toolkit that explains how and why historically constructed institutions condition the actions of policy makers and interest groups, providing both constraints and opportunities for reform (see, for example, Amenta, Reference Amenta1998; Immergut, Reference Immergut1998; Orloff, Reference Orloff1993; Skocpol, Reference Skocpol1992; Pierson, Reference Pierson1993; Steinmo et al., Reference Steinmo, Thelen and Longstreth1992; Streek and Thelen, Reference Streeck and Thelen2005). Scholars of this approach point to the “path dependency” of policies. Once a policy is institutionalized, it is very difficult to change, due to the various constituent communities that become vested in the benefits provided by an institution, such as pensioners who have come to depend on their pension benefits (Pierson, Reference Pierson1996). When this occurs, a policy will create its own base of support, generating a “lock-in effect” (Béland, Reference Béland2010) and resulting in “positive policy feedback,” making the prospect for change more politically challenging (Skocpol, Reference Skocpol1992; Pierson, Reference Pierson1993).

Policies can also generate “negative feedback” (Weaver, Reference Weaver2010; Patashnik and Zelizer, Reference Patashnik and Zelizer2013; Jacobs and Weaver, Reference Jacobs and Weaver2014) when a policy fails to establish or maintain satisfactory benefits and eventually loses political support, providing new impetus for path-departing change. In his analysis of public pension regimes across industrialized countries, Weaver (Reference Weaver2010) claims that positive and negative feedback intersect, along with incremental reform options, generating likely trajectories for policy change. Jacobs and Weaver (Reference Jacobs and Weaver2014) argue that one mechanism of negative (or “undermining”) feedback can occur through “emergent losses” that are unanticipated by the initial architects of a policy and that affect future groups negatively. As subsequent coalitions attempt to change a policy, long-standing rules and established program structures can stand in the way, so policy makers may resort to layering new policies over older ones. In a changing context of new social risks, this can generate unwanted outcomes, which then lead to new political demands for change.

Earlier HI scholars subscribed to a “punctuated equilibrium” model that depicted change as occurring abruptly during moments of crisis or significant “policy junctures” stemming from an “exogenous shock” situated between extended periods of “institutional stasis” (Steinmo et al., Reference Steinmo, Thelen and Longstreth1992; Hall, Reference Hall1993). More recently, HI scholars (Campbell, Reference Campbell2004; Hacker, Reference Hacker2004; Peters et al., Reference Peters, Pierre and King2005; Streek and Thelen, Reference Streeck and Thelen2005) have pointed to how institutional change in advanced political economies is occurring incrementally, often under the radar and in the absence of clear exogenous shocks, through processes such as “drift” (when a policy is not adapted to meet new social risks) and “layering” (new elements are appended to an existing institution) (Streek and Thelen, Reference Streeck and Thelen2005). For example, Myles (Reference Myles, Banting and Myles2013) describes the federal government's introduction of Pooled Registered Pension Plans (PRPPs) in place of CPP expansion (in 2011) as a “severe case of policy drift” (329), in which PRPPs were a “minimalist response to the national problem faced by today's workers and future retirees” (330). Here, drift is understood as the avoidance of maintaining an institution's initial policy objective in the face of changing external conditions, or “strategic neglect” (Streek and Thelen, Reference Streeck and Thelen2005). Drift can also arise from political stalemate or when multiple veto points are present.

Federal governance structures and the relationship between private and public policies can also shape policy outcomes. Béland and Myles (Reference Béland and Myles2012) compare old age and unemployment insurance reform in Canada during the 1990s to underscore how different institutional legacies shape governance structures, creating obstacles and opportunities for policy reform. “Joint decision federalism” is used to describe CPP, due to the agreement between federal and provincial jurisdictions that requires two-thirds of the provinces with two-thirds of the population to implement policy change. Subsequently, multiple veto points are established in CPP's institutional design, diminishing the prospect of significant policy change (Weaver, Reference Weaver2010). Similarly, Béland and Weaver (Reference Béland and Weaver2018) analyze governance structure to explain CPP reform in 2016. They argue that through the initiative of Ontario, CPP expansion can be understood, in part, through the dynamic of “collusive benchmarking,” in which a government will seek consensus to avoid a less desirable position that compels them to compete with other jurisdictions (Harrison, Reference Harrison and Harrison2006). Through this dynamic, Ontario was able to pressure the newly elected federal Liberal government of Justin Trudeau to “strike a deal with the provinces to bring about CPP reform” (Béland and Weaver, Reference Béland and Weaver2018: 2).

The following sections go into further detail to explore the dynamic between private and public pension policy, Ontario's political involvement in shaping CPP's governance structure, the role of risk as a driving political force, and partisanship. These factors help explain why Canada expanded social benefits at a time when other wealthy countries were making cuts to similar programs. Indeed, pension policy making in Ontario and other provinces and the impact of these policies on federal pension politics have received limited attention (as is the case for many local factors that inform national debates). As the remainder of this article will show, drift was occurring within Canada's pension systems, intensifying demands for path-departing change to CPP. Policy drift in Ontario's workplace pension system proved to be a source of negative feedback at the national level, resulting in renewed demands for CPP reform in the late 2000s. As will become clear, this process was filtered through the structure of Canada's retirement income system (RIS) that had been established over 50 years earlier. The emergence of new risks in the face of policy drift fuelled growing demands for program expansion in a context of neoliberal retrenchment. A policy window (Kingdon, Reference Kingdon1984) emerged with the arrival of a new context of partisanship at the provincial and federal level, facilitating a dynamic of collusive benchmarking that ultimately removed the final hurdles necessary for reform.

Ontario Policy Making and Federal Pension Politics in Canada: 1963–1990

A comprehensive account of all factors that have shaped pension politics in Ontario and Canada during the postwar period is beyond the scope of this article. However, several items can be highlighted. The PBA, enacted in 1965, was pioneering legislation for its time and was a factor in shaping the development of the Canada/Quebec Pension Plan (C/QPP) legislation, leading to the joint federalism governance structure of CPP (Béland and Myles, Reference Béland and Myles2012).

Led by the Ontario Progressive Conservative party under Premier Leslie Frost, initial drafts of the PBA planned to make workplace plans mandatory for every worker in the province (Weitz, Reference Weitz1992; OECP, 2008). The PBA was designed to establish “minimum standards” of pension regulation that would encourage the expansion of the pension system, improve solvency to meet best practices and limit the waste of pension contributions while also facilitating the needs of a mobile workforce.

Early on, Ontario's new legislation gained the attention of the Quebec government, which saw pension reform as a mechanism for improving financial capacity (Little, Reference Little2008). Premier Jean Lesage was exploring policies that could expand Quebec's financial and economic independence and conducted a review of Ontario's PBA. When Lesage caught wind of the federal government's plan to introduce a pay-as-you-go CPP, he called for a Quebec plan to build up a large fund that would use the savings of Quebec's workforce to invest in provincial economic development (Little, Reference Little2008: 25–26). Ontario, on the other hand, was promoting the expansion of its private pension system as an alternative to CPP. This position was driven in part by Ontario's strong life insurance industry, which saw a public contributory pension plan as a threat to their industry. Eventually, Quebec refused to support the federal government on CPP unless Prime Minister Lester Pearson agreed to create a separate QPP. To win Ontario's support, Pearson agreed that any future changes to CPP would require two-thirds of the provinces with two-thirds of the population, virtually giving the province a veto on any future amendments. Once the final framework for C/QPP was established and promulgated, the Ontario government reformed their PBA, removing the provision that would make workplace coverage mandatory for workers in Ontario. Given that all Canadian workers would be partially covered by a federal public plan, workplace plans would voluntarily exist beside the CPP rather than replace it. At the same time, CPP was designed to supplement other retirement savings, replacing up to only 25 per cent of the average industrial wage. This period, and the dynamics between the federal, Ontario and Quebec governments, established two pillars of Canada's RIS through the development of a legislative framework for a private and public pension system.Footnote ² It was the structure of this RIS that would shape pension politics into the twenty-first century.

By the mid-1980s, the PBA was almost 20 years old and in need of reform, and Ontario would be the first province to reform provincial pension legislation.Footnote ³ In the 1970s, the downturn in the global economy had led to an economic crisis that culminated in severe cutbacks of industrial operations. Plant relocation or closure by domestic, American and other foreign firms became common. Many of Ontario's workers and pensioners experienced job loss and/or considerable reductions to benefits built up over years of contributions, bringing into focus the limitations of existing pension legislation. This led to a new source of negative feedback at the provincial level, pressuring the Ontario government to provide more security through policy reform.

Also in the 1980s, workplace pensions entered into the fray of economic globalization, linking worker retirement income security to transnational corporate governance practices and global financial markets. Conservative blue-chip investment portfolios were replaced with modern portfolio theory, while professional pension consultancy emerged as a voice of authority over pension governance and decision making (Marmer, Reference Marmer and Fabozzi1997; Carmichael, Reference Carmichael2005). Defined contribution (DC) plans grew as a popular alternative, and they were layered onto Ontario's existing defined benefit (DB) pension system (Myles, Reference Myles, Banting and Myles2013), allowing workers to profit from higher returns on equities. Job tenures were shrinking, catalyzing demands for mobile retirement- savings vehicles. It is in this context that the risk of saving for retirement became more individualized (Christensen, Reference Christensen2016).

Unionization levels in Canada also began to drop dramatically in the 1980s, particularly for men working in private-sector industrial jobs. As Figures 1 and 2 illustrate, the drop in pension coverage for men coincided with dropping unionization rates beginning in the mid-1980s. As economic integration with the United States deepened, the balance of class forces in the private sector was tipping further in favour of capital, resulting in diminishing pension coverage of remunerative industrial jobs.

Sources: Statistics Canada, Labour Force Survey, 1997 to 2014; Labour Market Activity Survey, 1986 to 1990; Survey of Union Membership, 1984; Survey of Work History, 1981. Cited from Galarneau and Sohn (Reference Galarneau and Sohn2013).

Figure 1 Unionization Rates of Employed Individuals Aged 17–64, Canada, 1981–2014

Source: Pension Plans in Canada, 1977 to 2011, and previous Statistics Canada publications on pension plans. Cited from Statistics Canada (2015).

Figure 2 Percentage of Male and Female Employees with a Registered Pension Plan, Canada, 1947–2011

These changing economic conditions fuelled new ideas on how to remedy growing levels of risk. The pension policy transformations occurring in Ontario were part of a broader national discussion termed the “Great Pension Debate,” which involved conversations about expanding the C/QPP and the role of workplace pension plans (Béland and Myles, Reference Béland, Myles, Bonoli and Shinkawa2005; Little, Reference Little2008). Given the transformation underway in Canada's economy and the reality that the majority of Canadian workers had no workplace pensions, stakeholder groups across civil society, the business community and government produced a corpus of policy reports on how to improve income security for Canadian workers. The C/QPP was just over ten years old in the late 1970s and, according to Little (Reference Little2008), “the tenor of the times was such that grand proposals for new social programs were still very much on the agenda” (51). Labour groups and other activists pushed for a doubling of CPP to 50 per cent income coverage (up from the 25 per cent income coverage that was then current). Although this campaign developed considerable momentum, it ultimately failed by the early 1980s under recessionary economic conditions and was followed by a period of “claw-backs” (Rice and Prince, Reference Rice and Prince2013). An early period of policy drift was thus established, as the “big” ideas of the 1970s fizzled.

1990s to 2000s: Workplace Pensions Limp into the Twenty-First Century

Whereas the 1980s saw economic globalization and corporate restructuring begin to disrupt the postwar industrial employment relationship, the 1990s were characterized by employers seeking to exit en masse from the provision of retirement income. Growing regulatory and accounting standards, unfavourable court rulings and deteriorating economic conditions highlighted the “asymmetry of risk” involved with plan administration from an employer and plan-sponsor perspective. Decreasing unionization levels also continued into the 1990s, particularly for men in the private sector, allowing more employers to diminish pension benefits with less resistance from workers (see Figure 1) (Garlarneau and Sohn, Reference Galarneau and Sohn2013). An economic recession began in 1990 in Ontario, resulting in more plant closures and the displacement of thousands of industrial workers. Unemployment levels in Ontario rose to 10.2 per cent by 1992, representing the loss of 250,000 jobs (Evans and Smith, Reference Evans, Smith, Evans and Smith2015). Given these conditions, the 1990s saw the rapid rise of new social risks in which saving for retirement became more individualized among the provincial workforce, in part reflected through the expanding use of DC plans and overall decreasing pension coverage (Christensen, Reference Christensen2016). Slippage between the PBA and emerging economic context was intensifying. This combination of factors resulted in a range of governmental policy responses in Ontario that layered new policy onto the existing workplace pension policy framework. This included temporary solvency relief measures as well as initiatives to facilitate joint sharing of risks and costs, such as the establishment of jointly sponsored pension plans (Ambachtsheer, Reference Ambachtsheer2007).

During the mid-1990s, the financial structure of CPP was substantively reformed. Actuarial reports indicated that current contribution rates and demographic trends would make CPP's financial structure unsustainable in the long term, if not reformed. The federal government, along with the provinces, agreed to double contribution rates to 9.9 per cent and to establish the Canada Pension Plan Investment Board, an arm's-length organization that would invest CPP funds to optimize higher returns (Little, Reference Little2008). These reforms, however, were designed only to maintain the long-term financial sustainability of CPP and did little to address the broader issue of decreasing pension coverage across Canada's labour force.

By the 2000s, private and public pension policy became increasingly contentious at the provincial and national levels, generating new market-driven and market-accommodating ideas aimed at retrenchment. An anti-pension discourse had taken root among different groups across Canada that were attempting to privatize Canada's public pension system, led by organizations such as the C. D. Howe Institute, Fraser Institute, the Association of Canadian Pension Management, and by the Reform and Alliance political parties (Townson, Reference Townson2001). This discourse was linked to a transnational neoliberal project that sought to privatize public pension systems around the world (Orenstein, Reference Orenstein2008). Leading the way was the World Bank, whose advocates justified their ideas through claims of an impending “demographic time bomb” that would be disastrous for national economies (World Bank, 1994; Townson, Reference Townson2001; Blackburn, Reference Blackburn2002; Béland and Gran, Reference Béland and Gran2008). The Reform party (in which Stephen Harper was a member of Parliament at the time) had been advocating for the abolishment of the CPP, to be replaced with super-RRSPs (Registered Retirement Savings Plans). Similarly, Stockwell Day, as treasurer of the Alberta government, threatened to take Alberta out of the CPP unless other finance ministers agreed to allow people to opt out of a CPP and set up individual savings accounts (Townson, Reference Townson2001). These market-driven ideas offered a new set of proposals on how to manage pension systems, which were picked up by some conservatives in Canada. As economic conditions shifted and demands for CPP retrenchment circulated, consensus on pension policy declined as divergence of opinion grew, resulting in a continued period of policy drift.

By the early 2000s, policy drift in Ontario was deepening as a combination of issues intersected, creating a tense political environment in which political leaders were fearful to touch the pension file (Leech and McNish, Reference Leech and McNish2013). During the five years of Mike Harris's Conservative neoliberal policy agenda, unionization rates had sunk to 27 per cent in 2002, making Ontario ninth in union density among Canada's ten provinces (Haddow and Klassen, Reference Haddow and Klassen2006). The first baby boomers began to retire, generating new demographic pressures. As long-service workers in Ontario's traditional industries were leaving the workforce, younger workers were not being offered the same level of employment protection. At the same time, the Ontario government became embroiled in a series of high-profile corporate restructurings in the steel, automotive and tech industries,Footnote ⁴ negotiating with unions and corporate employers that had become insolvent and faced bankruptcy, which was threatening the security of private-sector DB plans for tens of thousands of workers and retirees across the province. Pension jurisprudence continued to play a leading role in defining pension policy in the absence of new legislation. And funding concerns replaced discord over surplus entitlements. The decade ended with the largest global recession in economic history. Accordingly, in the 2000s, adequate pension coverage had become a “crucial public policy objective” (Kaplan and Frazer, Reference Kaplan and Frazer2013: 74). As workplace pension policy grew increasingly contentious, mounting failures contained in pillar three of Canada's RIS crossed jurisdictional boundaries of policy making, generating new calls for CPP reform that would highlight tensions embedded within CPP's governance structure. This simmering mix of issues portended a trenchant period for pension politics that would eventually lead to policy reform at both levels of government.

Ontario Expert Commission on Pensions: Time for Change

In a context of diminishing pension coverage (Leech and McNish, Reference Leech and McNish2013), the PBA was also becoming an impediment for doing business, making corporate restructurings more difficult around items such as asset transfers. The courts became more involved in pension-related disputes as the PBA failed to provide rules on emerging issues. For many in the business community and labour movement, and for bureaucrats in the Ontario government, this environment symbolized the need for reform.

In this context, by the early 2000s, bureaucrats within Ontario's Ministry of Finance had begun pushing for a commission during the tenure of the Eves government. Initially this was viewed as politically unfeasible. In late 2002, the Eves government suffered severe political backlash on Bill 198, Keeping the Promise for a Strong Economy Act. Embedded in what was a budget bill, the bill's pension provisions were interpreted by workers and unions as removing surplus rights of pensioners and members retroactive to 1988, igniting the collective ire of workers, unions and pensioners across the province. A recent court ruling had just asserted employee rights to surpluses during a partial wind-up.Footnote ⁵ Bill 198 was seen as supplanting this decision, leading to a mass rally of angry pensioners at Queen's Park. Within a month of tabling Bill 198, Finance Minister Janet Ecker and Premier Ernie Eves promised to excise the pension provisions from the bill.

The victory of the Liberal party in 2003 led by Dalton McGuinty provided a new policy window (Kingdon, Reference Kingdon1984) for officials in the Ministry of Finance to establish an independent review of pension policy in Ontario. In 2006, nearing the end of McGuinty's first term in office, Finance Minister Greg Sorbara agreed to move forward on what would become the Ontario Expert Commissions on Pensions (OECP). The McGuinty government saw this an opportune time, one in which a commission could be used to push the issue forward into the next election cycle. To remove pensions from the immediate agenda, Sorbara appointed law professor Harry Arthurs to look at the mix of simmering issues. Sorbara had been a student of Arthurs at Osgoode Law School in the 1970s and had worked with him as Minister of Colleges and Universities and Minister of Skills Development from 1985 to 1987 when Arthurs was president of York University. The OECP was mandated to examine only voluntary workplace DB pensions in Ontario in order to develop new strategies to protect and expand DB plans.

The OECP was presented to the Ontario government October 31, 2008, shortly after the most dramatic events of the global financial crisis of 2007–2008. As the government began to mull through the report, they were also hearing from constituents and stakeholders concerned about the effects of the recent crisis on their retirement savings. The global financial crisis had increased the profile of the pension file, and public fears regarding financial security were being stoked. Given low interest-rate levels and the proximity of baby boomers to retirement, DB plans were viewed as important by more members of the public.

Stakeholder groups were pleased that there was movement finally on some of the key issues and particularly around asset transfers, which had generated a lot of problems in the early 2000s with large corporate and public-sector restructurings. Some of the OECP's recommendations informed Bill 236 and Bill 120, which came into effect in 2010, reforming aspects of the PBA for the first time in over twenty years.Footnote ⁶ But these changes were only protecting workers with a workplace plan and did nothing to mitigate new social risks as the broader conditions of decreasing workplace pension coverage deepened.

Growing tensions with Ontario's workplace pension system and CPP surfaced during the consultation rounds undertaken during the OECP. Commissioner Harry Arthurs documented the deepening degree of pessimism among stakeholders on both sides of the ideological spectrum regarding Ontario's pension system. These views ranged from claiming the system was “experienc[ing] serious difficulties” to being “on life support” or even “dead” (OECP, 2008: 189). Considerable innovation would be required to remedy the future of DB plans in Ontario.

Because of the limited scope imposed on the OECP's mandate, Arthurs never explicitly called for CPP expansion. Yet, in acknowledging “market factors” and “shrinking union density” as structural forces that diminished pension coverage, Arthurs conceded there were “intrinsic limits to the kinds of recommendations I might make to improve coverage and strengthen the system” (OECP, 2008: 190). Indirectly, the OECP had become a platform that legitimized calls for CPP expansion, given the growing consensus across Ontario's pension community that the PBA was fundamentally flawed in a way that required broader policy reform. Subsequently, reports such as the OECP served to reinvigorate a national debate on worker insecurity, shaping a new period of pension politics in Canada that would lead to significant policy change.

2010s: The Return of Big Ideas

The slow recovery from the global financial crisis, coupled with the downward trend in pension coverage in the private sector and the belief that many workers would not have access to workplace pensions, led to a new context in which big ideas on how to expand coverage began to take precedence in Canada once again, with Ontario playing a leading role. Ontario Finance Minister Dwight Duncan wanted to expand CPP to address Ontario's beleaguered private-sector workplace pension system. Workplace pension coverage had dropped from 45 per cent in 1992 to 39 per cent in 2009 (Townson, Reference Townson2011), and unionization levels had dropped to historic lows below 30 per cent (Galarneau and Sohn, Reference Galarneau and Sohn2013). Policy makers around the country believed a pension crisis was unfolding in Canada and were questioning the capacity of workplace pension systems to adequately provide security for the majority of Canadian workers. Consequently, the simmering problems located in the workplace pension system at the provincial level were spilling over into the realm of public pension policy making.

In May 2009, Federal-Provincial-Territorial Ministers of Finance created the Research Working Group on Retirement Income Adequacy. A ministerial steering committee chaired by Alberta MP Ted Menzies, on behalf of federal Finance Minister Jim Flaherty, hired Jack Mintz, an economist from the University of Calgary, as research director overseeing a commission that produced several reports on income adequacy in Canada. On December 18, 2009, Mintz submitted the Summary Report on Retirement Income Adequacy Research, which brought together the findings of these reports.

Just a month earlier, Bob Baldwin, former policy director of the Canadian Labour Congress (CLC), had submitted a report to the Ontario government that also focused on the adequacy of Canada's RIS (Baldwin, Reference Baldwin2009). Although Ontario was involved with the Research Working Group on Retirement Income Adequacy, the Ministry of Finance, shortly following the OECP, had hired Bob Baldwin to conduct a separate report that would not be under the purview of Jack Mintz. Since Mintz was viewed by some pension officials in Ontario as business friendly, there had been a push to conduct an independent report produced by a specialist with a labour background. Research completed for Mintz's report, along with research for Baldwin's report, was presented at an “Experts Day” conference on pension policy in October 2009, attended by professionals and experts involved with Canadian pension policy (Baldwin, Reference Baldwin2009; Mintz, Reference Mintz2009).

The reports submitted by Mintz and Baldwin provided different conclusions on the adequacy of Canada's RIS. Baldwin estimated that approximately one-third of Canadians in the latter stage of their careers would likely have inadequate income to maintain their current standard of living in retirement. The Mintz report, on the other hand, denied that there was a crisis, concluding that “Canadians [were] … doing relatively well in ensuring that they have adequate savings for retirement” and that only minor changes were required to improve the system (Mintz, Reference Mintz2009: 26). Different groups on the political spectrum cited these reports over the coming year.

Ontario Finance Minister Dwight Duncan had communicated to his federal and provincial colleagues that expanding CPP was the best means to address Canada's decreasing pension coverage. Due to the joint governance structure of CPP, Duncan had to lobby federal and provincial leaders on this issue. The CLC was also actively lobbying the Harper government and the provinces to double CPP from 25 per cent to 50 per cent of average adjusted pensionable earnings, to be phased in over a period of several years (Townson, Reference Townson2011). Initially, federal Finance Minister Jim Flaherty agreed to discuss incremental expansion of the CPP. Hassan Yussuff (now the current CLC president) was organizing meetings with various finance ministers and others, and the CLC's campaign had gained some traction, garnering widespread support from various organizations, including the Canadian Federation of Municipalities.

Other experts came out in support of expanding CPP, including Simon Fraser University economist J. Rhys Kesselman (who was also former assistant to chief statistician Michael Wolfson) and Jack Horner, a former federal finance department official, both of whom produced reports indicating fundamental reform should be pursued (Horner, Reference Horner2009; Kesselman, Reference Kesselman2010). Baldwin's report was also cited in support of expanding CPP. On the other side, business lobby organizations such as the Canadian Life and Health Insurance Association, the Canadian Federation of Independent Business and think tank C. D. Howe Institute came out in favour of Pooled Registered Pension Plans (PRPPs), market-based voluntary investment vehicles that would allow workers without an employer pension plan to pool their retirement savings with other workers. Also, Alberta Finance Minister Ted Morton had made clear he did not support any expansion of CPP. A new national pension debate was emerging: different governments were hiring different experts to analyze Canada's RIS, and these experts were drawing competing conclusions that supported their ideological positions on how government should respond.

Flaherty was initially open to the idea of expanding CPP, and there seemed to be a general sense of commitment by governments across Canada. But at a finance ministers’ meeting in December 2010, the federal government changed its tune, refusing to expand CPP and instead indicating it would move ahead with PRPP legislation (Townson, Reference Townson2011). The federal government had chosen a private-sector solution to address Canada's “pension crisis,” exemplifying what Myles (Reference Myles, Banting and Myles2013) described as a “severe case of policy drift,” as the federal government dodged demands for policy reform (329).

The federal government's position on CPP deeply frustrated the Ontario government (Artuso, Reference Artuso2012). Allowing CPP to drift was increasingly viewed as unacceptable from Ontario's perspective, given rising levels of risk among its labour force. Although most provinces supported PRPP legislation, many hoped the federal government would at the same time move forward with CPP expansion as a form of political compromise. When it became clear that this would not happen, Dwight Duncan, in protest, refused to meet with Ted Menzies to discuss PRPP legislation the following summer. Duncan said his government would only introduce complementary provincial PRPP legislation if the federal government would agree to incremental increases to the CPP. Critics of the PRPP proposal, including Duncan, argued that providing another voluntary system would not mitigate the largest problems facing Canada's RIS (Brown and Meredith, Reference Brown and Meredith2012; Ambachtsheer and Waitzer, Reference Ambachtsheer and Waitzer2011). Canada's $900 billion in unused RRSP contribution space suggested workers were not taking advantage of voluntary savings options (McFarland, Reference McFarland2011). These events deepened federal–provincial tensions between Ontario and Ottawa, providing a new rationale for Ontario to develop its own provincial public pension system: the Ontario Retirement Pension Plan (ORPP).

The ORPP can be viewed partially as the product of poor federal/provincial relations between Ontario and Ottawa, largely premised on ideological differences regarding fiscal management and the extent to which government should provide retirement income security for workers. Ontario desperately wanted to expand CPP as economic conditions pushed pension coverage lower in the province. But they could not do so unilaterally. Although the majority of provinces supported expanding CPP to some extent, there was not consensus among the provinces, facilitating inaction on Harper's part and thus eliminating a major policy mechanism from Ontario's toolkit. When Kathleen Wynne replaced McGuinty as Ontario premier in 2013, she responded politically with the ORPP to apply pressure on the federal government.

In the absence of a federal commitment, Wynne established the ORPP as a central policy of her party's platform leading up to the 2014 provincial election. With a surprising majority victory, Wynne had a new mandate on Ontario's pension file. Shortly following the election, Wynne let it be known that the door was open if the federal government changed its mind, hoping the ORPP would pressure the federal government to reconsider. But at a meeting in December 2014, junior Minister of State Kevin Sorenson refused to discuss CPP reform. Sorenson went on the offensive with an op-ed in the Financial Post, calling plans to expand CPP a “job-killer” that would cost Canada's economy between 17,000 and 50,000 jobs. Sorenson defined raising CPP contributions as a “tax” on employers and cited a Canadian Federation of Independent Business report that claimed small businesses would reduce investments in their businesses and decrease the number of employees if CPP was expanded (Sorenson, Reference Sorenson2013). In the same piece, he criticized the Ontario government's proposed ORPP and their unwillingness to set up PRPP legislation. The Conservative federal government had publicly castigated the Ontario government's public pension policy objective as imprudent. Ontario/Ottawa relations were at a new low. This became a tipping point for the Wynne government, and Ontario began to move forward with the ORPP throughout 2015 by organizing an expert task force that included ex–Prime Minister Paul Martin and future Finance Minister Bill Morneau.

When explaining why policy windows open or close, Kingdon argues, “When [an] issue isn't really hot, advocates hold firmly to their extreme positions. But when the issue has a serious chance of legislative or other action, then advocates become more flexible, bargaining from their previously rigid positions” (Kingdon, Reference Kingdon1984: 176). A new policy window opened when the Liberal party led by Justin Trudeau won a majority victory, paving the way for a collusive benchmarking dynamic between Ontario and other governments who earlier were unwilling to expand CPP (Béland and Weaver, Reference Béland and Weaver2018). Trudeau had campaigned on a platform that included pension reform, ideologically aligning his party with the Ontario Liberals while establishing a clear difference with Harper's electoral platform on retirement income. At a meeting in June 2016, Canada's finance ministers, with the exception of Quebec and Manitoba, came to an agreement to enhance the CPP replacement rate from 25 per cent to 33 per cent. Payroll rates would be increased from 9.9 per cent to 11.9 per cent, phased in from 2019 to 2023, shifting the limit of maximum earnings from $54,900 to $82,700 between 2016 and 2025 (McFarland and McGugan, Reference McFarland and McGugan2016). The election of the NDP party in Alberta in 2015 diminished Alberta's previous opposition to CPP expansion (Béland and Weaver, Reference Béland and Weaver2018), while Saskatchewan was persuaded to sign on when Trudeau agreed to delay the start date of the enhancement to 2019 and extend phase-in implementation to 2025 (Wherry, Reference Wherry2016). Manitoba signed on to the agreement several weeks later (CBC, 2016).