I will be blogging from Halifax next week, at FORUM, the annual conference of the Canadian Pension & Benefits Institute. The conference draws benefit and pension industry executives from across the country. This year’s event has taken on added significance in light of Finance Minister Jim Flaherty’s modest pension reform proposals.

If my reference to Flaherty’s ideas as modest strikes you as odd, you’ve probably been studying up on the subject. To read the country’s editorialists on the outcome of this week’s meeting of finance ministers and treasurers, you would think the federal finance minister has demanded a radical set of changes. That couldn’t be more wrong.

As I reported on Monday, Flaherty is recommending two key steps: a modest rise in Canada Pension Plan benefits funded by increased employer and employee contributions; and the development of multi-employer defined contribution plans, provided by the financial services industry, for self-employed and other workers. (Again, in the interest of disclosure, Sun Life Financial is on-record supporting the second move.)

Flaherty’s proposals are reasonable and carefully measured. I think this for three reasons:

1. He is advocating for increased coverage under both a defined-benefit (DB) and defined-contribution (DC) model. This is progressively pragmatic in an important way. Pension industry professionals often debate the relative value of DB and DC plans. Flaherty’s risen above that, recognizing that both models have something to offer: the Canada Pension Plan provides a defined benefit and the financial services industry can expand the availability of DC plans.
2. Flaherty is looking for ways to take advantage of two existing retirement savings platforms. The infrastructure that the Canada Pension Plan runs on, and the one that Canada’s financial services industry built in support of employer-sponsored DC plans, are both strong and scalable. It makes sense to take fuller advantage of existing capabilities.
3. It’s a change. There was real concern before Flaherty issued his letter to provincial finance ministers that pension reform had lost momentum. I was among those who felt this opportunity was going to pass without action. It looks like I was wrong, fortunately.

It’s also important to note that we’re short on specifics so far. For example, we don’t know how much Canada Pension Plan premiums will rise. And we don’t know how that increase will be split between employers and employees. A detailed plan will be presented at the next finance minister meeting this fall.

It is reasonable to worry that increases to Canada Pension Plan premiums, if taken too far, could slow our economic recovery in the same way a significant tax increase would. But there is plenty of room to bring these proposals to life in a carefully planned manner. The idea that the federal conservatives don’t understand the need to tread cautiously here strikes me as improbable.

And the fact is we need change. Three-quarters of Canadian workers over the age of 45 say they’re concerned about maintaining a reasonable standard of living as they grow older, according to a new study sponsored by the Canadian Institute of Actuaries. In too many cases, those fears are well-founded.